^ 

^^^ 

w^. 


IMAGE  EVALUATION 
TEST  TARGET  (MT-3) 


4i 


1.0 


I.I 


Uiljl    12.9 

■ii     lU       12.2 

E  lit  ■" 


IL25  III  1.4 


III 


1.6 


6" 


Photographic 

ScMices 

CoTDoration 


93  WIST  MAIN  ITRIIT 

WItlTIR.N.Y.  I4SI0 

(7U)I72-4S03 


^^'^^\^^ 

^^<^ 

^      ^ 
^ 


V 


A' 


CIHM/ICMH 

Microfiche 

Serieso. 


CIHJVI/ICiVlH 
Collection  de 
microfiches. 


Canadian  Instituta  for  Historical  Microraproductiont  /  Inttitut  Canadian  da  microraproductions  liistoriquas 


Technical  and  Bibliographic  Notas/Notas  tachniquas  at  bibliographiquas 


Tha  Inatituta  haa  attamptad  to  obtain  tha  baat 
original  copy  availabia  for  filming.  Faaturas  of  thia 
copy  which  may  ba  bibllographically  uniqua, 
which  may  altar  any  of  tha  imagaa  in  tha 
raproduction,  or  which  may  significantly  changa 
tha  usual  mathod  of  filming,  ara  chackad  balow. 


D 


D 


D 
0 


D 


D 


Colourad  covars/ 
Couvartura  da  coulaur 


I     I   Covars  damagad/ 


Couvartura  andommagAa 

Covars  rastorad  and/or  iaminatad/ 
Couvartura  rastaurte  at/ou  paliiculia 


I — I   Covar  titia  missing/ 


La  titre  da  couvartura  manqua 

Colourad  maps/ 

Cartas  giographiquas  an  coulaur 

Colourad  inic  (i.a.  othar  than  blua  or  blacic)/ 
Encre  da  coulaur  (i.a.  autra  qua  blaua  ou  noiia) 


I     I   Colourad  platas  and/or  illustrations/ 


Planchas  at/ou  illustrations  an  coulaur 


Bound  with  othar  material/ 
Rail*  avac  d'autras  documents 


Tight  binding  may  causa  shadows  or  distortion 
along  interior  margin/ 

La  re  liure  serrAe  peut  causer  de  I'ombre  ou  de  la 
distortion  le  long  de  la  marge  intArieure 

Blanic  leaves  added  during  restoration  may 
appear  within  the  text.  Whenever  possible,  these 
have  been  omitted  from  filming/ 
II  se  peut  que  certaines  pages  blanches  ajouttas 
lors  d'unr  restauration  apparaissent  dans  le  texte, 
mais.  loriique  cela  Atait  possible,  ces  pages  n'ont 
pas  «tA  film«es. 

Additional  comments:/ 
Commentaires  supplAmentaires; 


The 

toti 


L'Institut  a  microfilm*  la  mailleur  examplaira 
qu'il  lui  a  AtA  poasibia  da  se  procurer.  Les  details 
da  cat  exemplaira  qui  sont  peut-Atre  uniques  du 
point  de  vue  bibliographiqua.  qui  peuvent  modifier 
una  image  reproduite.  ou  qui  peuvent  exiger  una 
modification  dene  la  mAthoda  normala  de  filmaga 
aont  indiquAs  ci-dassous. 


r~n   Coloured  pages/ 


D 


Pagea  da  couleur 

Pagea  damaged/ 
Pages  endommagAas 

Pages  restored  and/oi 

Pages  restaurAas  at/ou  paliiculAes 

Pages  discoloured,  stained  or  foxac 
Pages  dAcolorAas,  tachatAes  ou  piquAas 

Pages  detached/ 
Pages  dAtachAes 

Showthrough/ 
Transparence 


r~~1  Pagea  damaged/ 

I — I  Pages  restored  and/or  laminated/ 

I      I  Pages  discoloured,  stained  or  foxed/ 

r~|  Pages  detached/ 

rr/j  Showthrough/ 


The 
poai 
ofti 
film 


Ori| 

begi 

the 

sior 

othi 

first 

sion 

or  11 


0   Quality  of  print  varies/ 
QualitA  inAgale  de  I'impression 

r~n   Includes  supplementary  material/ 


Comprand  du  material  supplAmentaire 

Only  edition  available/ 
Seule  Edition  disponible 


The 

shal 
TINI 
whi 

Mai 
diffi 
enti 
begl 
righ 
reqi 
met 


Peges  wholly  or  partially  obscured  by  errata 
slips,  tissues,  etc.,  have  been  refilmed  to 
ensure  the  best  possible  image/ 
Les  pages  totalement  ou  partiellement 
obscurcies  par  un  feuillet  d'errata.  una  palura. 
etc.,  ont  AtA  filmAes  i  nouveau  de  fapon  h 
obtenir  la  mailleure  image  possible. 


This  item  is  filmed  at  the  reduction  ratio  checked  below/ 

Ce  document  est  film*  au  taux  de  riduotlon  indlqui  oi-dessous. 

10X  14X  /    ItX  ZiK 


12X 


1IX 


aox 


28X 


aox 


a4x 


ax 


: 


32X 


A 


Tlw  copy  filmad  hmn  has  Immi  raproduccd  thanJ-n 
to  th«  g«n«roaity  of: 


L'Mwnplaini  f ilm4  f ut  raproduit  grica  A  la 
gAnArosit*  da: 


Univanity  off  Toronto  Library 


Univtnity  of  Toronto  Library 


Tha  imagaa  appaaring  hara  ara  tl«a  baot  quality 
possibia  considaring  tha  condition  and  lagibllity 
of  tha  original  copy  and  in  Icaaping  with  tha 
filming  contract  apacificationa. 


Laa  imagaa  suivantaa  ont  4t*  raproduitas  avac  la 
piua  grand  soin,  eompta  tanu  da  la  condition  at 
da  la  nattat*  da  i'axamplaira  film*,  at  an 
conformitA  avac  laa  conditiona  du  contrat  da 
filmaga. 


Original  capias  in  printed  papar  covara  ara  fllmad 
beginning  with  tha  front  covar  and  anding  on 
tha  last  paga  with  a  printad  or  llluatratad  impraa- 
slon,  or  tha  back  covar  whan  appropriate.  All 
othar  original  copiaa  aro  filmed  beginning  on  the 
first  paga  with  a  printad  or  llluatratad  imprae- 
alon.  and  anding  on  the  laat  paga  with  a  printad 
or  llluatratad  impraaaion. 


Laa  exemplaires  originaux  dont  la  couvarture  an 
papier  eat  ImprintAa  sont  fiimAs  en  commandant 
par  la  pramier  plat  at  an  tarminant  toit  par  la 
damlAra  page  qui  comporte  une  empreinte 
d'impreasion  ou  d'illustration,  soit  par  la  second 
plat,  salon  Is  cas.  Tous  las  autras  exemplaires 
originaux  sont  filmAs  an  commen^ent  per  la 
pramiAra  page  qui  comporte  une  empreinte 
d'impreasion  ou  d'iiluatration  at  en  terminent  par 
la  darnlAre  page  qui  comporte  une  telle 
empreinte. 


The  laat  recorded  freme  on  each  microfieha 
shall  contain  the  symbol  — ^  (meaning  "CON- 
TINUED"), or  tha  symbol  ▼  (meaning  "END"), 
whichever  appliaa. 


Un  dea  symbolea  suivants  apparattra  sur  la 
darnlAre  imege  do  cheque  microfiche,  sa^on  ie 
cas:  la  symbols  -^  signifle  "A  SUiVRE".  Ie 
symbols  V  signifle  "FIN". 


Maps,  plates,  charts,  etc..  may  be  filmed  at 
different  reduction  ratioa.  Those  too  large  to  be 
entirely  included  in  one  exposura  ara  fllmad 
beginning  in  the  upper  left  hand  comer,  left  to 
right  and  top  to  bottom,  aa  many  frames  aa 
required.  The  following  diagrama  illustrate  the 
method: 


Lea  cartas,  planches,  tableaux,  etc..  pauvent  Atre 
filmAs  A  des  taux  da  rAduction  diffArents. 
Lorsque  ie  document  est  trop  grand  pour  Atre 
raproduit  en  un  ssul  clichA.  il  est  fiimA  A  psrtir 
do  i'angia  supArieur  geuche.  do  gauche  A  droite, 
et  do  haut  en  bee,  an  pranant  ie  nombre 
d'images  nAcsssaire.  Lea  diagrammas  suivants 
illustrant  la  mAthoda. 


1 

2 

3 

1 

2 

3 

4 

S 

6 

Li 


CAS] 


S"„rf 


i 


^84^3  IV 


THE 


4^(i>h 


LAWS  OF  INSURANCE: 

FIRE,   LIFE,   ACCIDENT, 
AND  GUARANTEE. 


GMBODTINO 


CASES  IN  THE   ENGLISH,  SCOTCH,  IRISH,  AMERICAN, 
AND   CANADIAN  COURTS. 


BY 


JAMES  BIGGS  PORTER, 

.or  THE  INMGB  TKMPLB  AMD  SOUTH-EABTEIIN  CIBCUIT,   nAKBISTBR-AT-L/LW; 
ROLDBB  or  THE  riBR  rRISB  (1873)  IN   RQVITT  AND  BRAL  PBOPBRTV. 


AS8ISTC.D   BT 

WILLIAM  FEILDEN  CRAIES,  M.  A., 

VF  THR  INNRB  TR1IPI.B  AND  WRSTRRN  CIBCVIT,  BABBlSTRB-AT-LAW. 


FROM  THE  SECOND  {1887)  EDITION, 
WITH  NOTES  AJiTD  AMERICAN  CASES 

BT 

HENRY  DARRACH,  Esq., 

or  THR  PRtLADBLPRU  BAB. 


PHILADELPHIA: 
THE  BLACKSTONE  PUBLISHING  COMPANY. 

1889. 


Entered  according  to  the  Act  of  Congress,  in  the  year  1889,  by  the  Bi^CK- 
BTONE  PuBiasHiNO  CoMPANT,  iu  the  office  of  the  Librarian  of 
Congress,  at  Washington,  D.  C.  « 


00 


TO 


THE  HONOVKABLK 


SIR  WILLIAM  GRANTHAM,  Knight, 


VNKorTHBjunaiMor  hrr  UMwan^  hiqh  covbt  or  jubticb. 


C- 


TUI8  KDITIOK  or  A  MAKVAL  OV 


Jut^  tS87. 


THE  LAWS  OF  INSURANCE 


18,  WITH  PERMISSION, 


H^eiKpertftiUs)  ^tAitmitA 


BX 


THE  AUTHOR. 


(Hi) 


' 


Judg 
our  f 


xroTE. 


We  «ugge«t  to  bur  patrons  that,  to  facilitate  the  labor  of  the 
Judges  and  Reporters,  they  cite  the  TOP  PAGING  of  books  of 
our  SERIES,  and  add  £TBXT  BOOK  BBBJEa.^—Ediior. 


to 


>£rS^^< 


In 

noi 

ha> 
del 
su< 
du 
bo 
wl 

th< 


tal 

pa 

thi 
ici 
th 


W 


PREFACE  TO  THE  SECOND  EDITION. 


In  my  Preface  to  the  First  Edition,  I  mentioned  that, 
none  of  the  English  writers  on  the  Law  of  Insurance 
having  treated  in  one  volume  of  Life,  Fire,  and  Acci- 
dent Insurance,  and  important  piinciples  of  the  Law — 
such  as  Subrogation  and  Indemnity—having  been  much 
elucidated  by  recent  decisions,  it  seemed  to  me  that  a 
book  of  moderate  size,  containing  in  one  volume  the 
whole  Law  of  Insurance  (excepting  Marine  )— viz.,  Lift, 
Fire,  Accident,  and  Guarantee  Insurance^mi^ht  be  for 
the  convenience  of  the  profession. 

This  anticipation  was  not,  it  is  hoped,  entirily  mis- 
taken, for  the  First  Edition  was  taken  up  sooner  than 
was  expected.  Notwithstanding,  however,  the  com- 
paratively short  tinae  that  has  elapsed  since  the  book 
was  published,  numerous  fresh  cases  have  occurred  in 
this  country,  Scotland,  Ireland,  the  Colonies,  and  Amer- 
ica ;  and  those  which  I  considered  the  most  useful  of 
them,  numbering  over  160,  have  been  referred  to  in  this 

(vii) 


1  s 


* 

'I 


YiJi  PREFACE. 

Edition,  bringing  up  the  list  of  cases  to  upwards  of 

1560. 

As  the  American  and  Colonial'  Reports  are  numerous, 
and  their  abbreviations  are  not  always  familiar  to  the 
English  reader,  a  list  of  such  abbreviations  has  been 
gi^en;  and  the  statutes  alluded  to  will  be  found  in  the 
Index. 

J.  B.  P. 

Ikner  Tkmple, 

Jtdy  1887. 


CONTENTS. 

[The  paging  refers  to  the  [*]  pages.] 


CBhV.  FAOM. 

I.   NATURE  OF  THE  CONTRACT  OP  INSURANCE      .     .     .  1 — 20 

THE  CONTRACT  OF  INSURANCE 20 — 34 

II.  INSURABLE  INTEREST 35 — ^73 

•III.  THE  PREMIUM 74—98 

IV.  THE  RISK , 99—136 

V.  GENERAL  INQUIRIES  MADE  BY  INSURERS  ....  137 — 143 

VI.  WARRANTY 144 — 151 

VII.   MISREPRESENTATION  AND  CONCEALMENT       .     .     .  152 — 164 

VIII.  CONDITIONS  IN   POLICIES 165—208 

IX.  ARBITRATION ° 209 — 220 

X.   INDEMNITY 221—245 

XI.   CONDITIONS  AS  TO  AVERAGE 246 — 250 

XII.   REINSTATEMENT 251 — 258 

XIII.  RE-INSURANCE .  259—266 

XIV.  OBLIGATION  OF  TENANTS  TO  INSURE 267 — 280 

XV.   MORTGAGE 281—296 

XVI.  FIRE  POLICIES  AND  ASSIGNMENT 297 — 305 

XVII.   DISPOSITIONS  OF  LIFE  POLICIES 306 — 350 

XVIII.  LIEN 3.51—357 

XIX.   CONFLICTING  CLAIMS    .     .               338 — 359 

XX.  COMPANIES 360 — 386 

(ix) 


t     ■ 

II 


CONTENTS. 
[The  paging  refers  to  the  [  •  ]  ragi«>8-l 

PAOBS. 

XXI.  RIGHTS  OF  PULICY-HOLDEBS •     387—401 

XXII.  NOVATION  AND  AMALGAMATION 402-413 

414 — 421 

XXIII.  FOREIGN  COMPANY 

....    422—444 

XXIV.  AGENTS 

445 464 

XXV.  ACaDENT 

4fi5 471 

XXVI.  GUARANTEE  INSURANCE wo—^iJ. 

472—477 

XXVII.  BANKRUPTCY .     .     ti^ 

XXVIII.  THELLUSSON  AND  SUCCESSION  DUTY  ACTS  ....     478—480 

.   .*.  481 

INDEX 


i        5 

h  i 


i. 


I 


LIST  OF  CASES. 


[The  paging  refers 

Abbot  v.  Howard,  142 

Abrahams  r.  Agricultural  Mutual  Co., 
172,  194 

Accidental  Death  Co.,  Re,  892,  897, 
400 

Accident  Insurance  Co.  v.  Accident, 
Disease  and  General  Insurance  Cor- 
poration, 867 

Acey  V.  Fernie,  79,  95 

Adam's  Policy  Trusts,  880,  834 

Agar  V.  Athenaeum  Co.  872,  878,  428 

Agriculturist  Cattle  Co.  Re,  897 

Aitchison  v.  Lohre,  2,  12,  in,  126,  228 

Albert  Life  Assurance  Co.,  Re,  478 

Albert  v.  Bank  of  London,  405 

Albert  v.  Medical,  405 

Albion  Life  Co.,  Re  889 

Albion  Co.  v.  Mills,  22,  419,  437,  440 

Alchorne  v.  Savile,  244 

Aldebert  v.  Leaf,  888.  891,  897 

Alexander  v.  Campbell,  216 

Allan  V.  Markland,  62,  274 

Allen's  case,  412 

Alleyne  v.  Darcy,  859 

AUeyne  v.  Quebec  Co.,  257 

AUkma  v.  Jupe,  85,  230 

American  Basket  Co.  v.  Farm  villa  In- 
surance Co.,  64 

Ames  V.  Richardson,  293 

Amicable  Co.  v.  BoUand,  180,  183 

Amiss  V.  Witt,  807 

Anchor  Insurance  Co.,  Re,  Ex  parte, 
Badenoch,  410 

Anderson  v.  Commercial  Union,  204, 
260,  267 

Anderson  v.  Edie,  69,  70 

Anderson  v.  Fitzgerald,  80,  89,  146, 
816,  468 

Anderson  v.  Morice,  47,  55,  66 

Andersen  v.  Pacific  Co.,  146 

Anderson  t>.  Thornton,  76,  88 

Andree  v.  Fletcher,  86 

Andrew  v.  Ellison,  895 

Andrew's  Case,  418 

Andrews'  and  Alexander's  Case,  Re, 
London  Marine  Insurance  Co,  807 


to  the  [*]  paging.] 

Andrews,  Ex  parte,  67,  842,  846 

Andrews  r.  Bonsfield,  314 

Anglo- Australian  Co.  v.  British  Provi-- 

dent  Co.,  405,  406 
Anglo-Australian  Co  ,  Ex  parte.  Smith, 

406 
Appleby  v.  Mvers,  63 
Appleton  r.  Phoenix,  76 
Archambault  v.  Lamere,  286 
Armitage  v.  Winterbottom,  62,  58,  67 
Armstrong  and  Byrne,  Re,  812 
Armstrong  v.  Mutual  Life,  40,  131 
Armstrong  v  Turquand,  77,  166,  206 
Arthur  Average  Association,  Re.      See 

Corry  and  Hawksley's  Case 
Arthur  Average,  &c.,  No.  2,  397 
Arthur  ».  Wynne,  822 
Ashford  v.  Victorial  Mutual  Co.,  434 
Ashley  ».  Ashley,  40,  306,  819 
Ashworth  r.  Munns,  368,  380,  381 
Athenaeum  Co.,  Re,  Ex  parte  Prince  of 

Wales  Co^  260.  391,  896,  306,  422 
Athenaeum  Co.,  Re,  Ex  parte  Eagle  Co., 

869,  391,  898 
Athenaeum  Co.  v.  Pooley,  90,  372,  878, 

376,  425 
Atkins  V.  Arcedeckne,  345 
Atkinson  v.  Newcastle,  116 
Att.-Gen.  v.  Abdy,  323 
Att.-Oen.  V.  Continental  Life,  92 
Att.-Oen.  r.  Rowsell,  822 
Atwell  r.  Western  Co.,  176,  170 
Austin  V.  Drewe,  112,  116 
Australian  Agricultural  Co.  v.  Saunders, 

176 
Aylwin  v.  Witty,  852 


Babbaor  v.  Coulbum,  211 

Babcock  v.  Montgomery  Fire  Co.,  IIS, 

120 
Badenoch,  Ex  parte,   Re  Anchor  A«< 

surance  Co.,  410 
Baile  v,  St.  Joseph  Fire  Co.,  178 


(xi) 


I 


xu 


LIST  OF  CASES. 


F. 


(  I  •< 


[The  paging  refers 

Bailey  r.  American  Insurance  Co.,  288 

Bailey  v.  Gould,  67 

Baker  r.Holzapfel,  279 

Baker  v.  Langhorn,  423 

Baker  e.L.S.  W.  B.,  429 

Bai.!wtn  V.  Billinffiby,  314 

Baldwin  v.  New  York  Life,  207 

Baiestracci  r.  Fireman's  Insurance  Co., 
10 

Balfour  v.  Ernest,  368 

Ball  V.  Storie,  24  ^      , 

Bank  of  N.  S.  W.     See  New  South 
Wales  Br  tk 

Bank  of  Toronto  t>    European  Assur- 
ance, 465 

Banting  v.  Niagara  District  Fire  Co , 
190 

Barclay  v.  Cousins,  41 

Bargate  v.  Shortridge,  872 

Barker  v.  Janson,  8 

Barker  v.  Walters,  87 

Barnes  v.  Hartford  Co.,  241 

Barr's  Trusts,  310 

Barret  v.  Jermy,  172 

Barron  v.  Fitzgerald,  73 

Barry.  Ex  parte,  472 

Barsalon  v.  Royal  Insurance  Co.,  161 

BartlettV^  Case,  411 

Barton  v.  Gainer,  308,  325 

Basch  V.  Humboldt  Mutual  76 

Bashford  v.  Cann,  340,  842,  847 

Bassil  V.  Lister,  478 

Bateman,  Ex  parte,  280 

Bateman  v.  Service,  414,  419 

Bates  V.  Hewitt,  99,  108,  162,  164 

Bath's  case,  389 

Baxendale  r.  Harding,  109 

Baxter  r  Hartford  Co.,  60,  179 

Bayton  Insurance  Co.  v.  Kelly,  73 

Beacon  Fire  Co.  v.  Oibb,  115,  169,  206 

Beala  r.  Home  Insurance  Co.,  257 

Bean  v,  Stupart,  145,  160 

Beck's  case,  409 

Beebee  v  Hartford  Fire  Co.,  117 

i<fer  V.  London  and  Paris  Hotel  Co., 

371 
I  elfour  V.  Weston,  279 
'  lell's  case,  897 
Bell  I).  Lycoming  Fire,  189 
Bellamy  v.  Brickenden,  288,  290 
Benham  v.  United  Guarantee  Co.,  147, 

158.  469 
Bennett  v.  Agricultural  Co.,  172 
Benson  e.  Ottawa  Co.,  160 
Beresford  v  Beresford,  827,  828 
Bermon  v.  Woodbridge,  81,  88 
Berndton  v.  Strang,  867 
Betts,  Re,  846 
Bigelow  V.  Berkshire  Co.,  188 


to  the  [*]  paging.] 

Bignold  V.  Audlaud,  358 

Bilbie  r  Lumley,  161 

Bill  r.  Darenth  Co.,  872 

Billington  v.  Provincial  Co.,  176, 176 

Birrellr  Dryer,  80 

Bishop  V.  Clay  Ins  Co.,  20 

Bishop  r.  Scott,  888 

Bishop  of  Chatham   v.  Western,   &c., 

Co.,  £0 
Bisset  V.  Royal  Exchange  Co.,  203,  221, 

254 
Blackett  v.  Royal  Exchange,  82 
Blackburn  Low  &  Co.  v.  Vigors,  156 
Bleakley  V.  Niagara  District  Co.,  484 
Blood,  Ex  parte,  412 
Blundell's  case,  402 
Boardman  v.  Merrimack  Co.,  34 
Bodine  v.  Home  Insurance  Co.,  76 
Boehm  v.  Bell,  60 
Boehm  v.  Coombe.  100,  116 
Boldero  t;.  H.  E.  L  C,  861 
Bolland  v.  Desney,  180 
Bolton  ».  Ferro,  474 
Bondrett  v.  Hentig,  124 
Borradaile  r.  Hunter,  130,   185,    188, 

821 
Roswell  V.  Coaks,  847 
Bourne's  Case,  400 
Bowes  V.  Hope  Life  Co.,  867,  898 
Bowes  V.  National,  189,  190 
Bowes  V.  Shand,  82 
Bowring's  Case,  403 
Boyd  r.  Dubois,  104 
Bradburn  v.  G.  W.  R.,  19,  229,  445, 

446 
Bradley  r.  Mutual  Benefit  Life,  126, 129, 

180 
Brady  ».  North- Western  Insurance  Co., 

257 
Branford  v.  Saunders,  60,  69,  70 
Braunstein  v.  Accidental  Death  Co.,  210l 

860,  462 
Breasted  v.  Farmers'  Co.,  181,  138 
Brice  v.  Bannister,  807 
Bridger's  ftnd  Neil's  Cases,  878 
Bridges  v.  Garret,  428 
Bridges  v.  Longman,  277 
Brlnley  v.  National  Co  ,  257 
British   American    Insurance    Co.,    e. 

Joseph,  107, 108 
British  Equitable  r.  O.  W.  R.,  88,  169, 

816.  818, 824  »      »        i 

British  Equitable  v,  Musgrave,  146 
British  and  Foreign  Marine  Co.  v.  Gulf 

Railway  Co.,  281 
British  Industry  Co.  ».  Ward,  77,  79, 

161  '      »       » 

British  Mutual,  Ac,  Co.,  v.  Charnwood 
Forrest  Railway,  878 


LIST  OF  CASES. 


xiii 


[The  paging  refers 
Britisb  Provident,  Re,  405,  406 
Brinton  Medical,  Re,  401 
Britton  V.  Royal  1 12,  119,  200,  201 
Bromley  v.  Smith,  320 
Brook  r.  Stone,  288,  290,  849 
Brown,  Ex  parte,  818 
Brown's  Claim,  90 

Brown's  and  Tylden's  Case,  878,  899 
Brown  r.  Brown,  865 
Brown  v.  Freeman,  341,  842,  84Q 
Brown  r.  London  Assurance  Co.,  187, 

188,  189 
Brown  v.  Overbury,  210 
Brown  v.  Price,  849 
Brown  v.  Quilter.  287 
Brown  v.  Royal  Insurance  Co.,  204,  256 
Bruck  V.  Garden^  889,  841 
Bruce  v.  Gore  District  Co.,  176 
Bruce  v.  Jones,  226 
Buchanan  v.  Exchange  Co.,  168 
Bufe  V.  Turner,  105,  117.  159 
Buffum  V.  Lafavette  Mutual  Co.,  95 
Buist  r.  Scottish  Equitable,  88,  74 
Bulkeley  V.  Schultz,  415,  419 
Bullock  V.  Domitt,  271,  278 
Bullock.  Ex  parte,  846 
Burberson  v.  Hall,  296 
Burgess  o.  Eve,  466 
Burgess  and  Stock's  case,  90,  98,  894, 

487 
Burkhard  v.  Travellers',  460 
Burlinson  v.  Hall,  808 
Burnand  v.  Rodocanachi,  286 
Burridge  v.  Rowe,  320,  858 
Burrows  v.  Lock,  814 
Burton  v.  Gore  District  Co.,  236,  803 
Buchanan  v.   Liverpool,  London    and 

Globe,  129,  223  250 
Bushnan  v.  Morsan,  859 
Busk  V.  Royal  Exchange  Co.,  116 
Busteed  v.  West  of  England  Co.,  95,  96, 

857,  429,  481 
Butler  V.  Standard  Co.,  47,  108,  168 
Butterworth  v.  Western  Insurance  Co., 

483 
Byrne  v.  Muzio,  466,  466,  467 


Cahek  v.  Continental  Life,  161 
Cain  t>.  Lancashire  Co.,  102 
Caldwell,  Ex  parte,  816 
Caldwell  v.  Dawson,  845 
Calhoun  v.  Union  Mutual  Co.,  482 
Camden  r.  Anderson,  63 
Cameron  v.  Monarch  Co.,  194 
Cameron  v.  Times  and  Deacon  Co.,  198 
Ovnpbell  v.  French,  192 


to  the  [*]  paging.] 

Campbell  r.  Liverpool,  Ac ,  Co.,  170 
Campbell  v.  National  Co.,  80,  424,  488 
Campbell  v.  Victoria  Mutual  Co.,  118 
Canada  Insurance  Co.  r.  Northern  Co>, 

264,  265,  266 
Canada  Insurance  Co.  r.  Western  Co., 

430 
Canada  Agricnltnral  t.  Canada  Mutual 

Fire  Co.,  168,  178,  176,  190 
Canada  Landed  Credit  r.  Canada  Agri- 
cultural, 166,  183 
Cann  r.  Imperial  Fire,  190 
Canning  v.  Farquhar,  28,  75,  101,  165 
Carrington  r.  Commercial  Fire,    260. 

261 
Carpenter  v.  American  Co.,  442 
Carpenter   v.    Providence  Washington 

Co.,  68,  176 
Carpenter  v.  Qaeen's  Proctor,  471 
Carrigan  r.  Lycoming,  84 
Carruthers  r.  Shedden,  46,  66 
Carter  v.  Boehm,  9,  89,  117,  152,  162 
Carter  v.  Niagara  Dist.  Co.,  188 
Case  V.  Hartford  Co.,  116,  128 
Casey  v.  Goldsmid,  162 
Cashua  v.  N.  W.  National  Co.  188,  260, 

263 
Cashman  r.  London  and  Liverpool,  108, 

167 
Cassel    V.  Lancashire    and    Yorkshire, 

460 
Castellain  r.  Preston,  2,  4-6,  60,  51,  58, 

55,  65,  181,  221,  222,  230,  234,  280, 

252,  264,  268,  280,  282,  288,  292,  803, 

803,  867 
Castling  v.  Aubert,  366 
Cathcart'fl  Trustees  v.  Heneage's  Trua< 

tees,  478,  479 
Cathie's  Case,  378 
Cattlin  V.  Sprin^fieid  Co.^  108 
Cazenove  v.  British  Equitable  Co.,  139, 

160 
Central  National  Bank  v.  Hume,  886 
Chalmer's   v.  Mutual    Fire    Co.,    176, 

484 
Chambers  v.  Atlas  Insurance  Co.,  189 
Champlin  v.  Railway  Passengers  Co., 

445.  459 
Chanaler  v.  Worcester  Co.,  10 
Chapin  v.  Fellows,  807,  320 
Chapman  v.  Besnard,  868 
Chapman  v.  Chapman,865 
Chapman  v.  Eraser,  87 
Chapman  v.  Lancashire  Co.,  178,  186, 
Chapman  v.  Pole,  200,  201 
Charles  v.  Altin,  276 
Charlestown,  &c.,  Co  ,  v.  Fitchburg,  ^., 

Co.,  100 
Chariton  v.  Driver,  276 


1 


xiy 


Co., 


Charter  Oak  Co.,  e.  Brant,  829 
Chattock  V.  Shaw.  140,  149 
Chesterfield  v.  Bolton,  271 
Chisholmv-  Provincial  Insurance 

119 
Chown  r.  Baylis,  325 
Christie  v.  North  British  Co.,  22,  487 
Cinq  Mars  v.  Euqitable  Co.  187,  190 
City  Bank  v.  Sovereign  Life  Co  ,  137, 

184 
City  Fire  Co.,  v.  Corlies,  116,  121 
Citizens'  Insurance  Co.,  v.  Parsons,  174 
Claflin  r.  Commonwealth,  201 
Claperede  v.  Commercial  Union,  63 
Clack  V.  Holland,  837,  852 
Clark  u.Bly  thing,  177,229 
Clark  V.  Scottish  Imperial,  49,  71 
Clark  V.  Western  Co.,  02 
Clark's  Exors.'  Case,  876 
Clark  V.  Dixon,  34 
Clay  V.  Harrison,  65,  71 
Clegg's  Case,  411 
Clement  v.  British  Americcn  Co.,  48, 

194,  195 
Clia  r.  Schwabe,  132 
Clought).  L.  N.W.  R.,  228 
Cobb  V.N.  E.  M.  Marine,  216 
Cobbe's  Policy,  858 
Cocker's  Case,  409 


LIST  OP  CASES. 
[The  paging  refers  to  the  [•]  paging.] 


Coggs  V.  Bereard,  66 
Coghlan's  Case, 


:,  895,  402 
Collett  V.  Morrison,  22,  24,  66,  86,  327 
Colli  ngridge  v.  Royal  Exchange,  64,  65, 

280,  802 
Collins  V.  Locke,  209,  211 
Colmorc  v.  North,  471 
Colonial,  &c.,  Co.  v.  Adelaide  Marine 

Co.,  62,  259 
Colonial  Mutual  Co.,  Be,  382 
Columbia  Fire  Co.   v.   Lawrence,  64, 

116,  271 
Comey  v.  Harvey,  74,  76 
Commercial  Union  v.  Canada  Mining 


Union  v.  Lister,  5,  233, 
Mutual  V.   Union  Mutual, 


Co.,  178 
Commercial 

233,  294 
Commercial 

20 
Gompagnic  d' Assurance  ».  Grammon, 

77  ' 

Connecticut  Co.  v  Burrouehs,  820, 384. 
885  B    »       »       , 

Connecticut  Co. ».  Moore,  139,  140. 141. 
448  »  »       » 

Connecticut  Mutual  v.  Lucks,  60 
Connett  v.  Phoenix  Co.,  189 
Conquest's  Case,  410 
Conway  v.  Gray,  CS 
Conway  v.  Britannia,  809,  856 


Cook  V.  Black,  186 

Cook  V.  Field,  48 

Cooke  V.  Cooke,  210  , 

Cooper  V.  Massachusetts  Co  ,  132 

Cooper  V.  Pacipc  Mutual  Co.,  100 

Cope  V.  Rowlands,  85 

Copp  V.  Lynch,  442 

Cornell  v.  Liverpool,  London,  &c.,  Co., 

186 
Corrinay  v.  Gray,  52 
Cory  and  Hawksley's  Case,   367,  370, 

372 
Cotton  States  Life  Co.  v.  Lester,  91 
County  Life,  Re,  869 
Courtenay  v.  Ferrers,  328 
Courtenay  t>.  Wright,  340,  848 
Cowley  V.  National,  &c.,  Co.,  467 
Cox  V.  Hickman,  886 
Cray»  Hartford  Fire  Co.,  185 
Critchett  v.  American  Insurance  Co., 

431 
Croft  V.  Lindsay,  67 
Crofts  V.  Marshall,  31 
Crockatt  t».  Ford,  25,  359 
Cromwell  v.  Royal  Canadian  Insurance 

Co.,  416 
Crossley  v.  City  of  Glasgow  Co.,  316 
Crowley   v.  Agricultural    Mutual    Co., 

191 
Crowley  v.  Cohen,  39,  46,  56,  100,  101, 

102,  246,  265,  805 
Crozier  v.  Phoenix  Co.,  47,  108 
Culbertson  v.  Cox,  181,  304 
CuUen  V.  Thomson's  Trustees,  436 
Cunard  v.  Hyde,  44 
Currier  v.  Continental  Co.,  35,  40 
Currjjrt).  Commonwealth,  117 
Curtius  V.  Caledonian  Co.,  316 
Cusack  V.  Mutual  Co.,  66 


Dafoe  ».  Johnstown  District  Co  ,  177 

Daintree's  Claim,  208 

Dalby  v.  India  and  London  Life  Co., 

14,  17.  18,  806 
Dale's  Case,  413 
Dalgleish  v.  Buchanan,  02,  440 
Dalgleish  v.  Jarvie,  162 
Dalzel  V.  Mair,  74 
Daniels  v.  Emiitable,  101,  103 
Darcy  r.  Croft,  827,  864 
Darneirs  Case,  378 
Darrell  v.  Tibbitts,  4,  230,   284,  373, 

279,203,294 
Davies  v  Home  Insurance  Co.,  09 
Davies   v.    Trustees  of  Madras  Fund, 

861 


1 


LIST  OF  CASES. 


zv 


»  Co., 


370. 


If 


!    Co., 


irance 

(16 
Co., 

,  101, 


177 
I  Co., 


279, 


Fund, 


[The  paging  refers 
Dawson  v.  Fitz^rald,  211,  212 
Day  V.  Connecticut  Co.,  97 
Day,  JEx  parte,  841 
Dayton  Insurance  Co.  v.  Kelly,  76 
Dear  v.  Western  Insurance  Co.,  184 
Dearie  v.  Hall,  856 
De  Costa  r.  Scandret,  87,  88 
De  Forest  v.  Fulton  Fire  Co.,  40,  58 
De  Garminde  o.  Pigou,  76 
Delaney  v.  Stoddart,  298 
De  Launay  r.  Northern,  68 
Delaware  County  Co.  r.   Quaker    City 

Co.,  282 
Denham  v.  United  Guarantee,  147 
Denman  r.  Scottish  Widows,  840 
Deposit  and  General  Life  Co.  v.  Ays- 
cough,  879 
Desborough  v.  Harris,  375 
Devaux  v.  I' Anson,  41 
Dever,  Expaiie,  835 
Devlin  v.  Queen  Insurance  Co.,  10 
De  Winton's  Case,  90 
Dickson  v.  Jardine,  227,  288 
Dickson  v-  Provincial   Insurance  Co., 

175 
Digby  V.  Atkinson,  271,  272 
Din  V.  Quebec  Assurance  Co.,  190 
Dillard  v.  Manhattan  Life  Co.,  207 
Dixon  V.  Stansfield,  866 
Dobson  V.  Land,  288,  290 
Dobson  V.  Sotheby,  104,  116, 161,  138, 

267 
Doe  V.  Gladwin,  278,  277 
Doe  V.  Peck,  276 
Doe  V.  Rowe.  277 
Doe  r.  Shewin,  274 
Doe  V.  Sutton,  265 
Doe  V.  Ulph,  276 
Doeld  Pitt  r.  Laming,  110,  168 
Donaldson  r.  Manchester  Co.,  60 
Dorien  «.  Positive,  92 
Dormay  r.  Borrodaile,  186,  816,  821, 

848 
Dornink's  Case,  407,  411 
Douglas  V.  Murphy,  278,  275 
Dowker  v.  Canada  Life  Co.,  86,  89 
Downes  e.  Green,  48 
Dowse' 8  Case,  409,  418 
Doyle   V.  City   of  Glasgow   Co.,  447, 

462 
Drinkwater  v.  London  Assurance,  121, 

177 
Drysdale  v.   Pigott,    840,     842,     848, 

847  » 

Duckett  V.   Williams,     88,     89,     150, 

169 
Dudgeon  v.  Pembroke,  ?6,  44,  106 
Dufaur  v.  Profewional  Life  Co.,  181, 

188,  324 


to  the  [*]  paging.] 

Duff  V.  Fleming.  52,  270 

Duffell  V.  Wilson,  89 

'Dufourcet  v.  Bishop,  224,  231,  288 

I  Dumas  V.  Wylie,  428 

Dunnage  v.  White,  166 

Dupre's  Exors.,  Case,  411 

Durham's  Case,  896,  897 

Durrani  v  Friend,  804 

Duval ».  Northern  Co.,  414 

D wight  V.  Germania  Co.,  151 

Dwyer  v.  Edie,  46,  69,  71 

Dyson  v.  Morris,  847 


Eagle,  Ex  parte,  Re,  Athenaeum  Life, 

856,  808,  380 
Eastern  Counties  Railway  v.   Hawkes, 

874 
Eastwood  V.  Kenyon,  466 
Easum's  Case,  877 
Ebsworth  v.  Alliance  Marine  Co.,  49, 

53,  282 
Edge  V.  Duke,  77 
Edmed,  Re,  328 
Edwards   v.    Aberayron    Mutual,  210, 

211 
Edwards  v.  Barrow,  142 
Edwards  v.  Insurance  Co.,  188 
Edwards  v.  Martin,  426 
Edwards r.  Travellers'  Ins.  Co,  187 
Edwards  v.  Warden,  361 
Edwards  v.  West.  68,  264 
Elkhart  Mutual  Aid  v.  Houghton,  41 
Elliott  V.  Royal  Exchange  Co.,  211 
Ellis  V.  Kreutzinger,  366 
Ely  V.  Positive  Co.,  878 
Emmett,  Re,  848 
England  v.  Ld.  Tredegar,  26,  859 
England  v.  Franklin    Fire    Co.,    106, 

128 
English  and  Irish  Church,  kc,  Co.,  888, 

892,  398 
Equitable  Co.  v.  Perrault,    410,    417, 

420 
Equitable  Co.  t;.  Quinn,  198 
Era  Co.,  Re,  404.  487 
Ernest  v.  NichoUs,  868,   869,  870  404 
Etna  V.  France,  140 
Etna  Life  v.  Green,  428 
Etna  V.  Tyler,  68 
Etty  V.  Bridges,  810 
European  Co  ,  Re,  412        ' 
Evans  v.  Bignold,  28,  72 
Evans  v.  Coventry,  898,  897 
Elvnns  v.  Hooper,  806 
Evan's  claim,  412 
Everett  v.  Desborough,  141,  166,  168L 

208 


XVI 


LIST  OF  CASES. 


s  t 


\i  i 


!i  1 


and 


Co., 


[The  p*ging  refers 
Everett  V.  London  Assurance,  114,  115 
Eyre  P.  Glover,  41 


Fairbrother  v.  Woodhouse,  857 
Fairohild  v.  Liverpool  and  London,  1^7, 

243,  245 
Fairlie  v.  Christie,  24  . 

Falcke  r.  Scottish  Impenal,  92,  satf, 

861,  867  „    ^^„ 

Family  Endowment  Co.,  Be,  403 
Fanning  V.  London  Guarantee  Co.,  40tf 
Farebrother  v.  Woodhoure,  844 
Fawcett  v.   London,   Liverpool, 

Globe,  188 
Feise  v.  Parkinson,  88 
Fenn  v.  Craig.  160 
Feiguson  v.  Massachusetts,   Ac, 

34,70 
Fernie  v.  Maguire,  869 
Ferris  v.  Mullins,  866 
Filliteru.  Phippard,  270,  271 
Fire  Association  v.  Canada  Co.,  268 
Fisher  ».  Liverpool,  Ac,  Co.,  21 
Fisher  V.Smith,  856 
Fisk  V.  Masterman.  82 
Fitchburg  Railroad  v  Charlestown  Mu- 
tual Insurance  Co.,  97 
Fitton  V.  Accidental  Death  Co.,  80, 457, 

468 
Fitzherbert  v.  Mather,  158,  442 
Fitzwilliam  v.  Price,  849 
Fleming's  Case,  897,  407,  408, 412 
Fletcher  v.  Commonwealth  Co.,  116 
Flint  V.  Fleming,  41 
Flint  V.  Ohio  Co  ,  75 
Forbes  &  Co.,  Ifx  parte,  88,  149,  158, 

484 
Forbes  v.  Border  Counties  Co  ,  271 
Forbes  v.  Edinburgh  Life,  142,  448 
Ford  V.  Ryan,  859 

Forgie  o.  Uoyal  Insurance  Co.,  181, 188 
Fortescue  v.  Barnett,  818,  826,  386 
Forward  v.  Pittard.  56 
Forwood  V.  N.  Wales  Mutual.  125 
Foster  v.  Life  Assurance  or  Scotland, 

186 
Foster  v.  Mentor  Life,  262 
Foster  v.  Roberts,  820.  476 
Fowkea  v.  Manchester  Co.,  141,  162, 

158 
Fowler  V.  Scottish  Equitable,  24,  26, 88, 

91,  106.  871 
Fox  V.  Railway  Passengers,  &c.,  Co., 

216.  220 
Foy  V.  Etna  Co.,  178 
Fragano  v.  Long,  68 


to  the  [♦!  paging.] 

Franklin  v.  S.  E.  R.  446 

Frazer  ».  Gore  District  Co.,  85 

Frame  v.  Brade,  842,  848 

French  v.  Backhouse,  428 

French  V.  Patton,  24 

French  v.  Rosal  Exchange,  869 

Frere's  Case,  897,  407,  m 

FViedlander  v.  London  Assurance,  104, 

162,  168 
Frost  V.  Liverpool,  &c.,  Co.,  434 
Fry  ».  Fry,  67 

Fryer  v.  Moreland,  17,  18,  479,  480 
Furiing  V.  Carroll,  271 
Furta*)  V.  Rodgers,  82 


Galb   ».  Lewis,   177.    811,    428,   426, 

482 
Gamble   r.  Accident    Insurance     Co., 

460 
Garcelon  v.  Hampden  Insurance,  148 
Garden  v.  Ingram,  188,  278,  287 
Gardner  v.  Cazenova,  68 
Garner  r.  Moore,  70,  349 
Gaskin  v.  Phoenix  Co.,  283 
Gatayes  v.  Flather,  820 
Gauche  v.  London  and  Lancashire  Co., 

198 
Geach  v.  Ineall,  141.  160,  156 
Geiseck  v.  Crescent  Mutual  Co.,  121 
General  Land  Credit  Co.,  Re,  421 
German  Life  Co.'s  case,  412 
Gibson,  Ex  parte,  Be  Smith,  Knifjht  & 

Co.,  410 
Gibson  v.  Overbury,  855 
Gibson  V.  Small,  2o,  116,  146,  J4K 
Giffard  v.  Queen  Insurance  Co.,  :il,    >-, 

97,  438 
Gilchrist  r.  Gore  District  Co.,  170 
Gill  V.  Downing,  852 
Gillespie  v.  Miller   802 
Gillev  V.  Burley  328 
Girdfestoneo.  North  British  and  Mer* 

cantile,  161 
Glen  V.  Lewis,  171, 172 
Glover  v.  Black,  281 
Godfrey  v.  Wilson,  886 
Godin  V.  London  Assurance,  82 
Godsal  V.  Boldero,  14,  17,  69 
Godsal  V.  Webb,  819 
Goitt).  National  Protection' Co.,  76 
Goldstone  v.  Osborne,  211 
Gooderham  v.  Marlett,  68,  442 
Goodman  v.  Harvey,  12 
Goodwin  v  Lancashire  Fire  Co.,  117, 

188,  194,  208 
Gordon  v,  Ingram,  266 


LIST  OF  CASES. 


XVll 


104, 


426, 
Co.. 
148 


B  Co., 

21 
ii;ht  & 


I 


Mer* 


re 


,117, 


[The  paging  refers 
Gordon  »  Reramington,  120 
Gordon    v.  Sea,  Fire    and    Life    Co., 

369 
Gore  District  Co.  v.  Samo,  163,  164, 

167 
Goreley,  Ex  parte,  203,  253,  283,  284, 

288 

Gorman  p.  Hand-in-Hand,  105,  107, 
117,  118,  128,216 

Gosa  V  Withers,  2,  221 

Gottlieb  V.  Cranch,  340,  842,  844, 
347 

Gould  V.  British  America  Co,  198, 
19!) 

Goulston  V.  Royal,  42,  52,  201 

Gove  ».  Farmers'  Co.,  12,  119 

Grace  r  American  Ins.  Co.,  102 

Grain's  Case,  360 

Grandin  v.  Rochester  Co.,  62,  169 

Grant ».  Easton,  419.  421 

Grant «.  Etna.  106,  109, 147,  429 

Grant  v.  Parkinson,  63 

Grant  v.  Reliance  Insurance  Co.,  26 

Grantley  v.  Garthwaite,  846       ' 

Gray  v-  Sims,  86 

Great  Britain  Mutual  Cos.,  Re,  889 

Greaves  v.  Niagara  District  Co.,  190 

Green  v.  Ingham,  855 

Greet  w  Citizens' Co.,  118,  177 

Gregg  V.  Coates,  272 

Greiner  v.  Monarch  Co.,  199 

Grey  v.  Ellison,  849 

Grieve  v.   Northern  Co.,  184 

Griffey  v.  New  York  Central,  188,  810 

Griffith's  Case,  407 

Grogan  r.  London  and  Manchester  In- 
dustrial Co.,  143,  159 

Gurnell  v.  Gardner,  J310 

Guardians  Mansfield  Union  v.  Wright, 
4CS 


Haokdorn  tv  Oliverson,  54,  480 

Halford  v.  Close,  478 

Halford  v.  Kvmer,  85.  40         • 

Halhoad  v.  Young,  107 

Hall  V,  Railroad  Co.,  282 

Hull  ».  Wright,  256 

Hallett  V.  Dowdall,  897 

Hambro  v.  Hull  and  London  Fire  Co,, 

Hamilton's  (T^ord  Claud)  Case,  879 
Hamilton's  (Duke  of )  Trustees  v.  Flem- 
ing, 271 
Hamilton  v.  Mendcs,  284,  270 
Hancox  v.  Fishing  Insurance  Co.,  71 
Hansen  v  American  Insurance  Co.,  189 
Hunson  v.  Fishing  Co.,  69 

2  POUTER  ON  INSURANCE. 


to  the  [•]  paging.] 

Hare  ».  Barstow,  148 

Hargrave  r.  Parsons,  465 

Hargrove  r.  Smee,  30 

Hargrave,  Re,  366 

Harman's  (Pratt)  Case,  412 

Harris  v.  London  and  Lancashire,  124, 

200 
Harris  v.  Venables,  163 
Harrison  v.  Douglas,  215,  216 
Harrison  v.  Ellis,  107 
Harrison  v.    London    and  Lancashire 

Fire  Co.,  120,  193.  195 
Hartigan  v.  International  Life  Co.,  206 
Hartmann  v.  Keystone  State  Co.,  142 
Harvey  »  Beckwith,  211 
Hastie  v.  de  Peyster,  268 
Hastings  Mutual  Fire  Co.  r.  Shannon, 

423 
Hatch  V.  Mutual  Life  Co..  130 
Hathaway    v.   State     Insurance     Co., 

181 
Hatton  V.  Beacon  Co.,  176 
Hatton  ».  Provincial  Co.,  194 
Havens  v.  Middleton,  276 
Hawkins  v.  Coulthurst,  350 
Hawkins  v.  Woodgate,  842,  345 
Hawthorn's  Case,  426,  482 
Hawtrey's  Case,  41  *i 
Haycock's  Policy,  319,  358 
Hebden  v.  West,  10,  43,  44,  69 
Heckman  v,  Isaac,  66 
Hendrickson  r.  Queen  Insurance   Co., 

432 
Henkle  v.  Royal  Exchange,  24,  82 
Hennessy,  Ex  parte,  311,  432 
Henry     v.    Agricultural    Mutual    Co., 

481 
Henry  Rifle  Barrel  Co.  v.  Employers' 

Liability  Corporation,  43,  263,  464 
Henson  v.  Blackwell,  70,  343 
Hentig  v.  Staiiiforth,  86 
Herbert  ».  Mercantile  Fire  Co.,  118 
Hercules  Co  v.  Hunter,  119,  166,  222, 

228 
Herman  t;  Jeuchner,  85 
Hermann  v.  Niagara  Fire  Co.,  444 
Hey  V.  Wyche.  270 

V      Newport     Railway,     20, 


Hicks 

446 

HilU 

Hill  V. 


Hartford  Fire,  446 

Patten,  24 
Hill  t'.  Secreton,  54,  68,  71 
Hill  V.  Trenery,  827,  828 
Hillard  v.  Thurston,  271 
Hillier  v.  Alleghany  Co.,  121,  122 
Hinckley  v.  Germania  Fire  Co  i  B4 
Hirsch  v.  Im  Thurn,  215 
Hobdoy  t>.  Peters,  827 
Hodge  V.  Security  Co.,  444 


•  •• 

ZVlll 


LIST  OF  CASES. 


■!lt 

0 


hi 


23.  72,  86, 


Co 


Hodgson  r.  Glover,  41 
Hodgson  V.  Marine,  76 
Hodson  V.  Observer    Co., 

326  ^  , 

Hodson  t'.    Railway   Passengers 

217 
Holditch's  Case,  411 
Holland  v.  Smith,  67,  842,  843 
Holmes  v.  Blogg,  86 
Holfs  Case,  879 
Holt,  Re.  218,  219 
Holt  p.  Everall,  86,  326  830,  381 
Holtzmann  ».  Franklin  Fire,  121,  IM 
Holzapfel  v.  Baker,  279 
Home  Insurance  Co. ».  Baltimore  Water 

Co.,  68,  59, 242,  440 
Home  Insurance  Co.  v.  Garfield,  256 
Home  Insurance  Co.  v.  Myer,  189 
Home  Insurance  Co.  v.  Thompson,  2o6 
Hone  V.  Mutual  Safety  Co.,  265 
Hooper  v.  Accidental  Death  Co.,  460 
Hopkins  ».  Hawkeye  Co.,  77 
Hopkins  v.  Prescott,  163 
Horden  v.  Commercial  Union,  106 
Home  I'.  Anglo- Australian   Co.,   130, 

131,  133, 136 
Hort's  Ccse,  409 
Horton  v.  Sayer,  209 
Hough  t).  Head,  221,  223 
Houghton,  Ex  parte,  03 
Howard  v.  Refuge  Friendly  Society,  45 
Howard's  Case,  103 
How's  Exors '  Case,  411 
Howell  V  Knickerbocker  Co.,  104 
Howell's  Case,  412 
Howes  r.  Dominion  Fire  Co.,  51,  119 
Howes  p.  Prudential,  308,  825 
Huch  r.  Globe  Insurance  Co.,  252 
Hucking  v.  People's  Insurance  Co.,  12 
Huckman  v.  Fernie,  141,  166,  208 
Hugff  V.  Augusta  Insurance  Co.,  249 
Hughes  V,  Searle,  828 
Huguenin  v.  Rayley,  143,  159 
Hummeirs  Case,  888,  389,  400 
Humphrey  v.  Arabin,  842,  347 
Humphrey  ».  Hartford  Fire  Co  ,  282 
Hunt^s  Case,  809 
Hutcheson  v.  National  Co.,  150 
Hutchinson  v.  Wright,  892 
Hutton  V.  Waterioo,  143 


Ibbgtson,  Ex  parte,  298,  808,  814,  472, 

476 
Illinois  Central  Co.  r.  Woolf,  77 
Imperial  Marine  Co.  v.  Fire  Insurance 

Corporation,  19,  259,  261 
Indemnity  Case,  404,  406,  400,  408 


[The  paging  refers  to  the  [*1  paging.!  „     j.o 

India  and  London  Co.,  Jie,  413 
Inglis  p.  Stock,  62,  62,  63 
Insurance  Co.  v.  C  D.,  227 
Insurance  Co. 
Insurance  Co. 
Insurance  Co. 
Insurance  Co. 
Insurance  Co. 
Insurance  Co 


V.  Eggleston,  91 

V.  Fogarty,  253 

V.  Hope,  256 

V.  Insurance  Co.,  201, 263 

V.  Norton,  204 

^„„ p.  Thompson,  42 

Insurance  Co. ».  Transportation  Co.,  115 
Insurance  C)-  v.  Up de  Graff,  06 
Insurance  Co.  v.  Wilkinson,  139, 140, 423 
International  Life  Co.,  Re,  396 
International  )-.ife  Co.  v.  Hercules,  Co., 

412 
lonides  p.  Pacific  Co.,  25 
lonides  v.  Pender,  4,  90,  112,  200 
Irving  V.  Manning,  223,  250 
Isaacs  V.  Royal  Insurance  Co.  99,  108 
Izon  V.  Gorton,  279 


Jaoksox  v.  Boylston  Mutual  Co.,  222, 

V27  231 
Jackson  r.  Forster,  134,   im,  175,  177, 

181,  807.  824 
Jacobs  V.  Equitable  Co..  432 
Jacques  v.  Golightly,  44 
Jacques  p.  Harrison,  296 
Jeffries  v.  Union  Mutual,  137 
Jeffrey's  Policy,  857 
Jersey  City  Co.  r.  Nicholls,  200 
Jeston  r.  Key,  826 
Johnson  r.  Ball,  328 
Johnson  v.  New  Zealand  Co.,  49,  51 
Johnson  v.  North  British  and  Mercan* 

tile,  176,  245.  282 
Johnson  ».  Swire,  827 
Johnson  v.  Union  Mutual,  34 
Johnston  p.  Western  Co  ,  191 
Johnston  p.    West    of    Scotland    Co., 

222 
Jones  p.  Carey,  101 
Jones  V.  Consolidated  Co.,  324 
Jones  V.  Festiniog  Railway,  43 
Jones  V.  Gibbons,  311 
Jones  p.  Mechanics'  Fire  Co-,  201 
Jones  p.  Provincial  Co  ,  22,  142 
Jones  V.  Scottish  Accident,  414 
Joyce  p.  Kennard,  100,  250,  805 
Joyce  V.  Realm  Co.,  261,  262,  268 
Joyce  t).  Swann,  46  48 


Kains  p.  Knightly,  4,  20 
Kaltenbach  p.  M'^Kenzie,  224,  22S 


LIST  OP  CASES. 


XIX 


115 
423 

Co., 

08 

222, 
177, 


61 
srcan- 


Co., 


[The  paging  refera 

Eanady  v.  Gore  District,  188 

Kekewich  v.  Manning,  816,  326 

Keily  V-  Hochelaga,  117 

Kelly  V.  Home,  84 

Kelly  V.  Liverpool,  &c.,  176 

Kelly  r.  London  and  Staffordshire,  75, 

414,  410,  420 
Kelly  ».  Phoenix,  68 
Kelly  V.  Solan,  97 
Kelsall  V.  Taylor,  217 
Kendall  r.  Stevens  &,  Co.,  65 
Kensington,  Ex  parte,  865 
Kent  Mutual,  Be,  400 
Ker  V.  Hasting  Mutual  Co  ,  183 
Kerr  v.  British    American    Assurance 

Co.,  191,  192 
Kerwin  ».  Howard,  329 
Kidston  v.  Empire  Marine  Co.,  124 
Kill  V.  Hollister,  209 
King,  Ex  parte,  474 
King  V-  Accumulative  Life    Co.,    897, 

470 
King  V.  Glover,  42 
King  V.  Lucas,  837 
King    V.    Prince     Edward,    &c.,    Co., 

249 
King  V.  State  Mutual  Co  ,  283,  292 
Kingdon  v.  Castleman,  827 
Kingsford  v.  Swineford,  347 
Kirby's  Case,  376 
Kirkpatrick  v.   South   Australian   Co., 

96 
Klein  v.  New  York  Life  Co.,  91 
Knickerbocker  ».  Pendleton,  77,  191 
Knox's  Case,  412 
Knox  r.  Turner,  840,  842,  347 
Knox  V.  Wood,  42,  53 
Koster  v.  Eason,  423 
Kunzze  v.  American  Exchange  Co.,  120 


Lackgrstein  v.  Lackerstein,  328 
Lafarge    v.    London,     Liverpool,    and 

Globe,  190 
Laidlaw  v.  Liverpool  and  London  Co.,  198 
Lambkin  v.  Ontario  Marine,  119,  198 
Lambkin  v.  Western  Co.,  186,  186,  191 
Lancaster,  Ex  parte  840,  842,  847 
Lancashire  Co.  v.  Chapman,  194 
Lancey'a  Case,  877,  408  400 
Langdale  v.  Lason,  179 
Langel  v.  Mutual  Insurance  Co.,  198 
Langhorn  v.  Cologan,  24,  87 
Langston.  Ex  parte,  856 
Lanf^eviile  ».  Western  Co.,  128 
Lapierre  v.  London  and  Lancashire,  87 
Larocque  v.  Royal,  214 
Last  r.  London  Assurance,  899 


to  the  [»1  paging.] 

Law  V.  Londo'    Indisputable  Co.,   h , 

44,  70,  806,  891 
Lawder  v.  Lawder,  467 
Lawrence  v.  Accidental  Death  Co.,  456 
Lazarus  v.  Commonwealth,  42 
Lea  r.  Hinton,  840,  842,  848 
Learmonth.  Be,  820,  476 
Lee  V.  Abdy,  811,  416 
Lee's  Case,  877 

Leeds  v.  Cheetham.  254,  273,  287 
Lees  V.  Whiteley,  254,  284,  815 
Lefeuvre  v.  Sullivan,  867 
Lefevre  v.  Boyle,  317 
Lenders  v.  Anderson,  420 
Leonard  v.  Clinton,  835 
Leslie  v.  French.  351,  853,  476 
Lethbridge  v.  Adams,  897 
Levy  V.  Baillie,  122,  124,  200 
Levy  V.  Merchants  Co.,  237 
Lewine's  Case,  425 
Lewis  V.  King,  341,842 
Lewis  «■  Uucker,  221,250 
Lewis  V.  Springfield  Co.,  116 
Life  Association  of  Scotland  v.  Foster, 

30,  139,  142,  148,  150 
Limerick  Co  v.  O'Ferrall,  356 
Lindenau  v.  Desborough,  69,   71,   117, 

142,  162. 158,  160 
Lingley  v.  Queen's  Insurance   Co.,  46, 

67 
Linford  r.  Provincial   Horse,  &c.,  Co., 

97,  423,  431 
Lion  Mutual  Marine  v.  Tucker,  74 
Lishman  v.  Northern  Marine,  21 

and    London    v.    Gunther, 


London,  and  Globe  v.  Wyld, 
Pelletier, 


Liverpool 

170 
Liverpool, 

24 
Liverpool  Plate  Glass  Co. 

446 

Lloyd's  Case,  878 
Lloyd  r.  Union  Co.,  84 
Loader  v.  Kemp,  271 
Lockhart  v  Cooper,  46,  68 
Lockyer  v.  Offley.  103.  461 
Loflft  V.  Dennis,  278,  279 
Logan  V.  Commercial  Union,  191 
London  and  Lancashire  Co.  v.  Graves, 

129 
London  and  Lancashire  Co.  v.  Honey, 

158,  178,  214 
London  Life  Co.   ».  Wright, 

871 
London  and  N.  W.  R.  v.  Glyn, 

68.  60,  62 
Lonaon    and    N.  W.  R.    o.  Whinray, 

466 
London  and  Provincial  v.  Ashton,  866 
London  and  Provincial  v.  Seymour,  88 


28,   84, 
56,  57, 


XX 


i 


mi 


London  Assurance  r.  Mansell,  8,  ^• 
88,    145,    152,    153,   164,   168,   160, 

208  .    .  «», 

London  Assurance  r.  Sainsbury,  J2i, 

229,230,283  ^       ,      ,_ 

London  Guarantee  Co.  r.  Feamley,  187, 

191,  461.  468  _     „„ 

London  Life  Co.  r.    Wright,    23,    86, 

871 
London,  Liverpool,  Ac,  v.  Wyld,  168 
London  Marine  Co.,  Be,  397 
Long  p  Beeber,  170 
Longueville  r.  Western  Insurance  Co., 

124 
Loraine  v.  Thomlinson,  84 
Lord  V.  Dall,  41 

Lord  Advocate  v.  Earl  of  Rfe,  480 
Lotinga  r.  Commercial  Union,  134 
Louisiana  Fire  Co.  r.  New  Orleans  Co , 

266 
Lowell  Co  r.  Safeguard  Fire,  246 
Lowry  r.  Bourdieu,  83,  86,  89 
Lucena  v.  Crawford,  87,  41,  42,  68,  66, 

68,  72,  438 
Lycoming  Fire  v.  Schwenk,  180 
Lycoming  Fire  v.  Ward,  407 
Lyde  v.  Barnard,  314 
Lynch  V  DalzeU,  87,  42,  84,  110,  181, 

298,800 
Lynch  r.  Dnn^ord,  90,  442 
Lynch  v.  Hamilton,  90 
Lynford  ».  Provincial,  418. 
Lyons  r.  Providence  Washington  Ca, 
128 


MAfcCARTHT  r  Traveller's  Co.,  467 
MacClure  v.  Gerard  Fire  Co.,  128 
MacClure'ft  Claim,  425 
MacClure  9.  Lancashire  Ca,  105,  IOC, 

127 
MacCuaig  v.  Quaker  City  Co.,  196 
■MacCnllagh  r.  Yorkshire  Insurance  Co., 

416,  4-20 
MacCulloch  ».  Gore  District  Co.,  247 
MacDonald  r.  Irvine,  807 
MacDonald  v.  Law  Union,  150,  162 
Macdonell  t?.  Beacon,  173 
MacEwan  v.  Outheridge,  115 
Macfarlane  v.  Andes   Insurance    Co., 

22 
MacGibbon  r.   Queen   Insurance  Co., 

122,  124 
Macgregor  r.  Horsfall,  227 
Maclver's  Claim,  883 
Mack  V.  Lancashire  Co.,  195 
MacKean  ».  Commercial  Union,  187 
Mackenzie's  Exors.'  Case,  876 


LIST  OF  CASES. 
(The  puglng  refers  to  the  [•]  paging  ] 


Mackenzie  v.  Mackenzie,  885 
Mackenzie  v.  Coulson,  24 
Mackenzie  v.  Van  Sickles,  109 
Mackenzie  v.  Whitworth,  4,  269,  203, 

266 
Mackie  r.  Enropean,  Co.,  28,  20,  101 

419.  427,  480,  486 
Mackie  r.  Phoenix,  97 
MacLaws  v.  United  Kingdom  Temper- 
ance Co.,  150 
Macklin  v.  Waterhouod,  56 
Maclachlan  v.  Etna  Co.,  442 
Maclean's  Trusts,  322,  823 
Maclean  v.  Equitable,  189 

Macleod  r.  Citizens'  Co.,  192 

Macmanus  v.  Etna,  189 

Macmillan  e.  Gore  District  Co.,  200, 201 

Macqueen  v.  Phoenix  Co  ,  26 

Macrobbie  r.  Accident  Co..  166 

MacRossie  v-  Provincial  Insurance  Co., 
191,  192 

MacSwinney  v.  Royal  Exchange  Co.,  41 

Mo^wley's  Trust  326 

Mair  9.  Railway  Passengers,  &c.,  157 

Malcher  v.  King  William's  Town.  69 

Mallory  v.  Travellers  Co ,  138,  466 

Manbv  v.  Gresham  Life  Co.,  91, 191, 462 

Manchester  Fire  Co.  v.  Wykes,  183 

Mangles  v.  Dixon,  316,  817 

Manhattan  Co.  v.  Brougbton,  181.  188 

Mann  v.  Western,  193 

Manners  v.  Furze,  471 

March  v.  Att.-Gen.,  881,  894 

Marine  r.  Protector,  266 

Marine  v  Martin,  266 

Marks  v.  Hamilton,  42,  46,  67 

Marriage  v.  Royal  Exchange,  288 

Marriott  v.  Kinnersley,  327 

Marsden  v.  City  and  County  Fire,  116 

Marshall  v.  Emperor,  149 

Marshall  v  Schoiield,  62 

Martin's  Claim,  899 

Martin  v.  Home,  162 

Martin  v.  International,  484 

Martin  v.  Sitwell,  81 

Martin  v.  Travellers,  466 

Martineau  v.  Kitchen,  56,  62 

Marts  V.  Cumberland  Co.,  68 

Marvin  v.  Universal  Life.  424 

Mason  v.  Agricultural  Mutual,  198 

Mason  v.  Andes,  176 

Mason  v.  Hartford,  177,  488 

Mason  v.  Harvey,  190,  191,  201 

Mason  v.  Sainsbury,  179,  224,  281 

Mass6  V.  Hochelagn  Co  ,  76 

Master  v.  Miller,  24 

Masters  r.  Hamilton,  42 

Matthew  r.  Northern.  819,  895,  896. 

MatthewBon  v.  Royal,  62 


I 


i 


B 


LIST  OF  CASES. 


xzi 


!r<3, 

101 

)er- 


■i 


201 

Co., 
.,41 

57 

9 

,4.62 
183 


116 


«. 


[The  paging  referH 
Matthewson  v.  Western  Co.,  284, 285. 
Maugham  v.  Kidlev,  855 
May  r.  Standard  Rre  Co.,  182 
Mayall  v.  Mitford,  109.  147 
Maynard  v.  Rhode,  141,  152,  154,  166, 

208  448 
Mayor  of  New  York  o.  Brooklyn  Blre, 

46 
Mead  v.  Davison,  21.  436.  437 
Meagher  v.  Londfon  and  Lancashire  Fire 

Co.,  195,  200,  201 
Meats  V.  Humboldt,  168 
Mechanics'   Building  Society    p.   Gore 

District  Co.,  176 
Mellor's  Policv  Trusts,  Re,  86 
Mercantile    Mutual    Marine    Co.,    Re, 

378 
Merchants'  Co.  r.  Firemen's  Insurance 

Co.,  12 
Menzies  v.  North  British  Co.,  222 
Merrick  v.  Germania,  129,  245,  246. 
Merrick  t5.  Provincial,  169 
Mexborough  v.  Bower,  217 
Meyer  v.  Isaac,  80 
Miall  0.  Western  Co.,  299,  800 
Midland  Counties  Co.  v.  Smith,   116, 
*117,119,  :/67. 
Mildmay  v.  Folgham,  804 
Mildred  V.  Maspons.  23 
Milland(>n  v.  Atlantic,  214 
Miller's  Case,  412 
Miller,  Re,  Exparte,  Wardley,  459 
Miller  v.  Life  Insurance  Co.   76 
Miller  r.  Warre,  72 
Milligan  v  Kquitable  Co.,  48,  64 
Mills  V.  Griffiths,  296 
Milrov  V.  Lord,  326 
Manine  v.   Railway    Passengers'    Co., 

214,  215. 
Mitchell  V.  Edie,  226 
Moadinger  v.  Mechanics'  Fire,  82 
Moens  v.  Hay  worth,  163 
Mobile  Railway  v.  Jurey,  229 
Moffat  V.  Reliance  Co.,  424 
Mollison  V.  Victoria  Co..  66 
Moloney  v.  Tullock,  420 
Money  v.  Gibbs,  356 
Montreal  Insurance  Co.  v.  M'Gillivray, 

79,  371,  872,  422,  424,  426,  428 
Moore  v.  Connecticut  Co.,  187 
Moore  ».  Halfey,  78 
Moore  ».  Protection  Co.,  198 
Moore  v.  Woolsey,  188,  184,  824 
Morel   V.    Irving  Insurance    Co.,  241, 

257 
Morel  V.  Mississippi  Life  Co.,  455 
Morgan  v.  Lonaon  General    Omnibus 

Co.,  464 
Morland  v.  Isaac,  843 


to  the  (•]  paging.] 

Morocco  Land  Co.  r.  Fiy,  21 

Marrison  r.  Muspratt,  139,  152 

Moses  0.  Pratt,  83 

Moss  o.  Lejnl  and  General  Life,  28 

Motteux  r.  London  Assurance,  22 

Muir  0.  I*le>aing,  356 

Mulvey  r.  Gore  District  Co.,  188 

Murray  v.  New  York  Co.,  180 

Murrav  v.  Wells,  836 

Mutual  Life  Co.  0.  Allen,  40,  298,  311, 

416 
Mutual  Life  Co.  r.  Lawrence,  458 
Mutual   Safety   v.    Home,    259,    268, 

264 
Myer  0.  London,  Liverpool,  and  Globe, 

416 
Myers  0.  Perigall,  368,  880 


Natioxal  Bolivian  Navigation  Co.,  9. 

Wilson,  426 
National  Marine  0.  Halfey,  269 
National  Marine  0.  Protector,  263 
National  Provident  Life  Co.,  Be,  419, 

418 
Naughter  0.  Ottawa  Co.,  172,  IM 
Neall  0.  Read,  53 

Neill  0.  Union  Mutual,  79,  165,  424 
Newcastle  Fire  Co..  0.  MacMorran,  104, 

144,  147,  163 
New  England  Fire  Co.   0.   Wetmore, 

9m 
New  South  Wales  Bank  0.  North  British 

and  Mercantile  (No.  1),  65,  85,  181, 

183,  291,  801 
New  South  Wales  Bank  0.  Commercial 

Union,  82,  297 
New  South  Wales  Bank  0.  Royal  Insur- 
ance, 256,  258 
Newman  0.  Belsten,  20,   22,   101,   386, 

887 
Newman  0.  Newman,  818 
Newton  0.  Gore  District  Co.,  191 
New  York  Bowery  Co.  0.  New  York 

Fire,  89,  118,  259,  265,  266 
New  York  Central  Co.    0.    Protection 

Co ,  268 
New  York  Express  0.   Traders'   Insur- 
ance Co.,  115 
New  York  Life  0.  Flach,  189 
New  York  Life  0.  Fletcher,  88,  4JS 
New  York  Life  0.  Hendren,  207 
New  York  Life  0.  Statham,  207 
New  York,  Mayor  of,  0.  Brooklyn  Fir« 

Co.,  46 
New  York  State  Co.  0.  Protector  Co., 

268,  264 


ZZll 


HI 


m 


1 1 


r 


1  l[: ! 


Niagara  Fire  Co.  r.  De  Graff,  84 
NibTo  V.  North  American  InsuraDce  Co., 

254 
Nicholl's  Case,  877 
Nicholson  v.  Nicholson,  398 
Nicholson  v.  Phcenix  Mutual,  170 
Nicol  V.  Brftun,  441 
Noad  ».  Provincial  Co.,  126,  177 
Norris  r.  Caledonian,  354.  857,  476 
North  American  Fire  v.  Throop,  117 
North   American   Life   v.   Burroughs, 

454, 457  ^     _, 

North  British  and  Mercantile  r.  London, 
Liverpool,  and  Globe,  'il,  57,  288, 
239,  240,  292 
North  British  and  Mercantile  v.  Moffat, 

81,  66,  68,  61,  246 
North  British  Insurance  Co.  v.  Hallet, 

426,  483 
North  British  Insurance  Co.  ».  Lloyd, 

466 
North-Eastern  Insurance  Co.  r.  Arm- 
strong, 287 
North  of  England    Pure  Oil-Cake  v. 

Archangel  Marine,  299,  801 
Northrup  V.  Railway  Passengers'  Co., 

450. 
Norton  V.  Royal  Cc,  202 
Notman  v.  Anchor  Co.,  80,  207 
Norwood,  Ex  parte,  262,  266 
Noyes  r.  North-Westem  Co  ,  105,  128, 

129 
Nunneley.   Ex  parte,  Be  Times  Life 
Co.,  412 


Oaklet  v.  Portsmouth  Railway,  66 

Ocean  Wave,  The,  283 

O'Connor  ».  Imperial,  69 

Ogden  V.  Montreal  Co.,  282,  488 

O-Hara's  Tontine,  808 

Oldfield  V.  Price,  202 

Oldman  v.  Bewicke,  150,  181,  191 

Omnium  Co.  v.  Canada  Ins.  Co.,  286 

Oom  V.  Bruce,  86 

Otterbein  v  Iowa  State  Insurance  Co  . 

26 
Oxford  Building  Society  r.   Waterloo 

Mutual  Fire  Co.,  184 
Orr-Ewing  v.  Orr-Ewing,  417 


Pacaud  v.  Monarch  Co.,  174 
Pacific  Mutual  Co  v.  Butters,  429 
Packard  v.  Connecticut  Life,  886 
Packer  ».  Gibbins,  279 


LIST  OF  CABBB. 

[The  paging  refern  to  the  [•]  paging] 


Padstow  Total  Loss  Association    JKfl^ 
860,  866 

Page  V.  Fry,  50,  52 

Paine  v.  Meller,  64,  290 

Palethorpe,  lie,  474 

Pallas  V.  Neptune  Co.,  286,  299 

Palmer  v.  Hawes,  143 

Palmer  v.  Merrill,  816 

Palyart  ».  Leckie,  86 

Pare  r.  Scottish  Imperial  Co.,  437 

Paris  V  Gilham,  253,  255 

Parken  v.  Royal  Exchange  Co.,  418, 
417,  419 

Parker  r.  Eagle  Co.,  2  J6 

Parker  v.  Equitable,  68 

Parker  v.  Marquis  of  Anglesey,  847 

Parkes  v.  Bott,  b20,  828 

Pariby's  Case,  400 

Parry  ».  Ashley,  181,  304 

Persons  v.  Bignold,  24,  43,  434 

Parsons  v.  Queen  Insurance  Co.,  281 

Parsons   v.   Standard    Insurance    Co., 

173,  174 
Partridge  r.  Albert  Insurance  Co.,  879, 

436 
Paterson  v.  Powell,  44,  86 
Patterson  v.  Royal  Insurance    Co.,   37, 

487 
Patrick  V.  Eames,  72 
Patrick  Co  (St.)  v  Breamner,  419 
Patton  17.  Employers'  Liability  Corpora- 

tion,  188,  460 
Pawson  V.  Watson,  153,  154 
Pearson  v.  Amicable,  836 
Pearson  v.  Commercial  Union,  20,  31, 

84,  100,  105,  106,  128,  129 
Peck  ».  Phoenix  Co.,  170 
Pedder  v.  Moseley,  328 
Peddie  v.  Quebec  Fire,  108 
Pellast?.  Neptune,  298,  311 
Pelley  v.  Wilson,  307 
Pelly  V.  Royal  Exchange,  29 
Pelly  V.  Wathen,  356 
Pender  v.  Ainsley.  279 
Pendlebury  v.  Walker,  238 
Penfold  V.  Universal  Life  Co.,  468 
Penley  v.  Beacon  Co.,  23,  97,  185,  39!^. 
432  »      >       .        , 

Pennell  v.  Millar,  364 
Penniall  r.  Harborne,  273,  276,  289 
Pennsylvania   Mutual,    &c.,    v.  Wiler, 
151 

Peppitt  V.  North  British  and  Mercantile. 
482 

Perrins  v.  Marine,  &c.,  Co.,  148,   lOO. 
453  .        t        .         , 

Per-y  v.  Newcastle   District   Co.,    86, 

371 
^  erry  ».  Provident  Life  Co.,  461,  463 


QUEE 


LIST  OF  CASES. 


XXIU 


Pettigrew's  Case,  66 

PHeger  v.  Brown,  380,  842 

Phillip's  Insurance,  822 

Phillips  V.  FoxttU,  466,  468 

Phillips  V  Grand  River  Co ,  163,  166 

Phoenix  Co.,  Be,  Burgess  and  Stock's 

Case,  90,  98 
Phoenix  Co.  v.  Sheridan,  91.  101 
Phoenix  Co.  r.  Erie  and  Western,  56, 

116,  230,  231 
Pim  V.  Reid,  110,  117,  152,  167,  170, 

171,  206. 
Pinchin  v.  Realm  Fire  Insurance  Co.,  436 
Planters'  Insurance  Co.  v.  Meyers,  430. 
Piatt  V.  Kerry,  271 
Pocock's  Policy,  828 
Pollock  V.  U.  S.  Mutual,  458   _ . 
Pomares  e.  Provincial  Co.,  185 
Poole  V.  Adams,  64,  801 
Poole  V.  National  Provincial  Life,  425 
Post  V.  Hampshire  Mutual  Co  ,  288 
Potomac,  The,  229,  282,  287,  295 
Potter  V.  Rankin,  4,  22 
Pott's  Case,  418 
Power's 'Case,  411 
Powles  r.  Innes,  299 
Pownall's  Case,  377 
Preston  v.  Neale,  840 
Price,  Ex  parte,  400 
Price  V.  Worwood,  277 
Priest  V.  Citizens'  Mutual  Co.,  198 
Prince  of  Wales  Co. ,  Ex  parte.     See  Re 
]     Athenaeum,  262,  ;  91 
i Prince  of  Wales  Co.  v.  Athenaeum  Co., 

422 
Prince  of  Wales  Co.  v    Harding, 

364,  369,  371,  372,  873 
Prince  of  Wales  Co.  v.  Palmer,  33,  88, 

181 
Princess  of  Reuss  v.  Bos.     See  Reuss, 

Princess  of 
Pritchard  v.  Merchants,  &c.,  Co.,  79, 95, 

131 
Professional  Life  Co.,  Be,  397 
Propeller  Monticello  v.  MoIIison,  227 
Providence  Co.  v.  Martin,  460 
Provincial  Co.  v.  Etna  Co.,  186,  266 
Provincial  Co.  v.  Roy,  426 
Prudential  Co.  ».  Etna  Co.,  266 
Prudential  v.  Thomas,  858 
Pugh  V.  Duke  of  Leeds,  108 
Purdue  v.  Jackson,  817 
Putnam    v.   Commonwealth   Insurance 

Co.,  168 
Pym  V.  Blackburn,  271 


Quebec  Insurance  Co.  v.  St.  Louis,  232 


[The  p*ging  refern  to  the  [*^  paging.] 

Queen  Insurance  Co.  v  Devinney,  166 
Queen  Insurance  Co.  v.  Parsons,  26,  26 
Queen  of  Spain  v.  Parr,  442 
Quilter  v  Mdpleson,  276,  277 
Quia  V.  National  Insurance  Co.,  l&l 


96, 


Racine  r.  Equitable.  192 

Ramsay's  Case,  866 

Ramsay  Cloth  Co.  v.  Gore  District  In- 
surance Co.,  176 

Ramshire  v.  Bolton,  314 

Ra  idal  v.  Cochran,  229,  280 

Randall  v.  Lithgow,  188 

Rankine  v.  Potter,  224,  225,  226 

Ratcliffe  v.  Ocean,  Ac,  Co.,  43 

Rawbone's  Will,  307 

Rawls  V.  American  Insurance  Co  ,  70 

Rayner  v.  Preston,  64,  181,  237,  254, 
267,  296,  298,  300,  801,  802,  304 

Redpath  v.  Sun  Mutual,  416 

Reed's  Case,  878 

Reed  v.  Cole,  876 

Reed  v.  Lancaster  Fire  Co ,  106 

Reed  v.  Royal  Exchange,  35 

Reed  ».  WiUiamsberg  City  Fire  Co.,  47 

Rees  River  Co.  v.  Smith,  193 

Reesor  ».  Provincial  Co.,  232,  235,  236 

Reg.  r.  Boynes,  198 

Reg.  V.  Flanagan,  16 

Reg.  ».  Whitmarsh,  865 

Reid  V.  Gore  District  Co.,  172 

Reid  V.  Lancaster  Fire  Co.,  103 

Reid  V.  M'Crum,  288 

Reis  r.  Scottish  Eqiiitable,  203 

Relief  Fire  Co.  ».  Shaw,  22 

Reuss,  Princess  of,  v  Bos,  420 

Reynard  v.  Arnold,  278,  279,  286 

Reynolds  v.  Accidental,  &c.,  Co.,  456 

Rhodes  v.  Union  Insurance  Co.,  119 

Riach  V.  Niagara  District  Co.,  2C9 

Rice  V.  Provincial  Co.,  194,  198 

Richards  v.  Easto,  270 

Richards  v  Platel,  366 

Richland  County  v.  Sampson,  68 

Ridley  v.  Plymouth  Co.,  365 

Riggs,  t;.  Commercial  Union,  48 

Riley  v.  Home,  56 

Rintoul  ».  New  York  Central  Railway, 
231 

Ripley  ».  Insurance  Co.j  466 

Riit  V.  Washington  Marine,  429 

Rivaz's  Case,  412 

Robins  v.  Fireman's  Fund  Insurance 
Co.,  242 

Roberts  v.  Lloyd,  814 

Robertson's  Case,  361 


XXIV 


TABLE  OF  CASE8. 


il: 


u\ 


m 

HI 


[The  paging  refers 

Robertson  v.  French,  29 

Robertson  v.  Hamilton,  53 

Robertson  v.  Marjoribanka,  32 

Robertson  v.  Metropohtan  Lite,  Mi 

Robinson  v.  Bland,  417 

Robinson   i'.    George   Insurance   to., 

Robinson  v  International  Life,  434 
Robson  V.  M'Creight,  392 
Roebuck  v.  Humerton,  44,  45 
Rogprs  V.  Gra7.ebrook,  289 
Rohrbaeh  v.  Germania  Co.,  69.  480 
Rokcs  V.  Amazon  Insurance  Co  ,  1J4, 

448 

Rolfe  ».  Harris,  276 

Holland  v.  North  British  and  Mercan- 
tile, 105  10(i 

Romback  v.  Piedmont  Co.,  41 

Rsperi).  Lendon,  '90,  211 

Rose  V.  Medical,  &c.,  Co.,  19  

Ross  V.  Bradshaw,  148,   149,   153,  386, 
443  ,^, 

Rosa  V.  Commercial  Union,  191,  19 « 

BoL^siter  v.  Trafalgar  Life  Co.,  22,  419, 
427,  434,  436 

Routhr.  Thompson,  81,  82,  488.  489 

Routledge  r.  Burrell,  145.  160,  191 

Roux  V.  Salvador,  226,  253 

Row  V.  Dawson,  810 

Royal  Bank  of  India's  Case,  875 

Royal  British  Bank  v  Turquand,  422 

Rummens  v.  Hare,  307,  808,  325,  855 

Ruse  V.  Mutual  Benefit  Co.,  87,  416 

RusBV.  Mutual  Co.,  163 

Russell,  Re,  812 

Russell  V.  Canada  Co  ,  145, 151 

Russell  V.  Russell,  215 

Ryder  v.  Commonwealth  Co.,  267 


Sadler's  Case,  878 

Sadler's  Co.  v.  Badcock,  18,  37,  42,  84, 

181,  256,  298,  300 
Saint  Patrick  Insurance  Co.  v.  Brebner, 

406 
Salvin  v.  James,  94,  462 
Suumson  v.  Security  Insurance  Co.,  106 
tiantferson  v.  Aston,  466, 
Sanderson  v.  Simonds,  24 
Siirgent's  Trusts,  859 
Saunders,  Exparte,  818 
Saunders  v.  Best,  476 
Saunders  v.  Bunman,  889   357 
Sawtelle  v.  Railway  Passengers'  Co.,460 
Scanlon  v.  Sceales,  142 
Schmidt «.  New  York  Union  Co.,  119 
Schneider  v.  Provident  Life,  4)9 


to  the  [*]  paging.] 
Scholefield  v.  Lockwood,  290 
Schonder  v.  Wace,  179,  320,  325 
Schultze  V.  Schultze,  435 
Schultze  V.  Insurance  Co.,  130 
Schuster  v.  Dutchess  Co..  164 
Schumann  v    Scottish    Widows'  Fund 

Society.  338 
Scott  V  Avery,  209,  210,  2  1,  213 
Scott  V  Eagle  Co.,  390,  391 
Scott  V.  Home  Insurance  Co.,  120 
Scott  V  Liverpool  Corporation,  211 
Scott  V.  Niagara  District  Co ,  190 
Scott  V.  Phcenix,  190,  192 
Scott  V  Rose,  40 
Scottish    Amicable  v.   Northern,    204, 

240,  256,  V92 
Scottish  Equitable  c.  Buist,  7,  33,  78, 

143.  318 
Scottish  Widows'  Fund  ».  Buist.  19, 31('., 

817 
Scripture  v.  Lowell  Co  ,  113 
SeamansCo.  v.  N.  W.  Insurance  Co.,  91 
Sea  Insurance  Co.  v.  Hadden,  221,  229 
Sears  v.  Agricultural,  90  , 

Seqhetti  i .  Queen  In.<iurance  Co.,  199 
Seton  V.  Law,  434 
Seton  V  Satterthwaite.  331,  334 
Severance  f.  Continental  Co.,  106 
Sewell  V.  King,  807,  309,  326,  326 
Sevmour  v,  London  and  Provincial  &c., 

Co..  33 
Seymour  ».  Vernon,  267 
Shackleton  v.  Sun  Fire  Office,  108 
Shannon  v  Gore  District  Co.,  176,  423 
Sharp  V.  Milligan,  274 
Shaw  V.  Robberds,  110,  110,   154,   16» 

171 
SLaw  V.  St.   Lawrence  Fire  Insurance 

Co  ,  193 
Shearman  v-  British  Empire  Co..  339, 

357,  476 
Sheeley  t*.  Professional  Life  Co  ,  421 
Shepherd  v.  Beecher,  466 
Sherbonneau  v.  Beavei  Co.,  52 
Shilling  V.  Accidental  Death  Co.,  40,  71, 

141,  326,  448,  458 
Sibbaid  v.  Hill,  99 
Sidaways  r.  Todd.  62,  57,  67 
Sillem  V.  Thornton.  104,  172 
Silverthorne  v.  Gillespie,  53 
Simond  v.  Boydell,  81 
Simons  v.  New  York  Life,  45 
Simpson  v.  Accidental,  70,  452 
Simpson  v.  Scottish  Union,  250,  251 
Simpson  v.  Thompson,  0,  229,  231 
Simpson  v.  Walker,  341 
Sinclair  v.  Maritime,  &c.,  Co.,  464,  466 
Siordetr  Hall,  115 
Siter  V.  Morrs,  57,  58 


LIST  OF   CASES. 


xzv 


[The  paging  rerers 

Skingley,  ne.  272 

Smedley  v.  Felt,  336 

Smidmore  v.  Australian  Gaslight  Co.,  5, 

2i9, 233 
Smiley  v.  Citizen's  Fire  Co.,  195 
Smith  £x  parte,  392 
Smith,  Re,  325 
fiinith    V.    Accidental,    &c..     Co  ,    CO, 

457 
Smith  V.  Bank  of  Scotland,  4G8 
Smith  V.  Colonial  Mutual,  131,  257 
Smith  V.  Columbian,  28a,  290 
Smith  V.  Commercial  Union,  189 
Smith  V  Lascelles,  54,  56,  04 
Smith  V.  Queen,  190 
Smith  V.  Royal,  08 
Smith,  Knight,  &  Co.,  Re,  410 
Snow  V.  Carr.  427 
Solicitor"',    &c.,    Co.,   c\    Lamb,    135, 

184 
Solvency  Co.  v.  Freeman,  4G9,  470 
Solvency  Co  v.  Froane.  469,  470 
Solvency  Co.  v.  York,  469 
Somers  v.  Athenaeum    Co.,    156,    168, 

434 
Soupras  v  Mutual  Insurance  Co.,  175 
Southard  e.    Railway  Passengers'    Co. 

450,  455 
South  Australian  Insurance  Co.  v.  Ran- 
dall, 00,  61,  179 
Southcombe  v-  Merriman,  148,  157 
Sowden  v.  Standard  Co.,  434 
Spare  v.  Home  Mutual  Insuranuv  Co., 

68 
Spencer's  Claim,  412 
Spencer  v.  Clarke,  315 
Spcring's  Appeal,  872 
Splints  V.  Letevre,  423 
Squire  v.  Campbell,  344 
Stacey  v.  Franklin  Vire  Co.,  178,  239, 

245 
Stttckpoole  V.  Simonds,  13 
Stainbank  v.  Fenning,  43 
Stainbank  v.  Shepherd,  43 
Stainton  v.  Carron  Co  ,  166 
Stanley  v.  Western  Co.,  81,  114,  120, 

122  183 
Stanton  v.  Etna  Insurance  Co.,  62 
Stanton  r.  Home  Insurance  Co.,    02 
State  Fire    Co.,    Re,    801,    395,    396, 

398 
Stedmau  v.  Webb,  860,  367 
Steele  v.  M'Kinlay,  465 
Steen  Niagara  Fire  Co  ,  185,  846 
Steeves  v.  Sovereign  Fire,  199 
Steinbank  V.  Fcnnmg.  48 
Steinbank  r.  Shepherd,  48 
Stephens,  £x  parte,  413 
Stephens  t'.  Illinois  Insurance  Co.,  281 


to  the  [  *  ]  paging.] 

Stephenson's  Case,  379 

Stevenson  v.   London  and   Lancashire 

Co.,  47 
Stevenson  v.  Snow,  81,  83 
Stewart  v.  Merchants  Marine  Co.,  360 
Stirling  v.  Vaughan,  ft38 
Stock  V.  Inglis,  39,  41,  03 
Stockdale  v.  Dunlop,  41,  43,  43 
Stocks  v.  Dobson,  313 
Stockton  V.  Fireman's  Insurance   Co., 

431 
Stokes  V.  Cox,  45,  104,  174 
Stokoe  V   Cowan,  306,  325,  359 
Stone  V.  Marine,  81,  83 
Stone  V    United  States  Casualty  Co., 

459 
Stoneham  r.  Ocean,  440,  461 
Storie's  Trust.  343 
Stormont  v.  Waterloo  Life,  130,  133 
Strachan's  Case,  388 
Strachan  v.  M'Dougle,  308 
Street ».  Rigby,  217 
Summers  v.  Commercial  Union,  434 
Summers  v.  Eldston,  373 
Sunderland  Marine  v.  Kearney,  23 
Sun  Fire  Co.  v.  Wright,  41 
Sur  Fire  v.  Ocean  Insurance  Co.,  9 
Sun  Mutual  v.  Missisisippi  Co  ,  229 
Sun  Mutual  v.  Ocean,  9,  V67 
Supple  V.  Cann,  75,  166,  205 
Susquehanna  Insurance  Co.  v.  Toy  Co., 

im 

Sutherland  t>.  Pratt,  47,  04 
Sutherland    v.    Sun     Fire,     201,    202, 

266 
Swan    V.    Watertown     Insurance    Co., 

430 
Swann  v  Phillips,  814 
Swayno  r.  Swayne,  810 
Sweeney  v.  Franklin  Fire,  46 
Swete  V.  Fairlio,  1 6(» 
Swich  V.  Home  Life  Co.,  143 
Syers  v.  Bridge,  31 


Talamox  v.  Home  and  Citizens  Co.,  128 

'i  alb»)t  t).  Frere,  360 

Tallmonu.  Mutual  Fire  Co.,  189 

Tarleton  v  Stainfortli,  93 

Tato  V.  Hyslop,  281,  233 

Taunton  v.  Royal  Insurance  Co.,   114, 

871,  874 
Taylor  v.  Caldwell,  279 
Taylor  Ex  parte,  86 
Taylor  v.  Chester,  87 
Taylor  v.  Dunbar.  104 
Tebbetts  v.  Uamilton  Mutual  Co.,  88 


XXVI 


TABLE  OF  CASES. 


[The  paging  refers  to  the  [*]  paging.] 


1 


I!  f' 


;  [I  I 


i   :i 


435, 


!';• 


Tebbits  r.  Dearborn,  78 
Teiiues  v.  N.  W.  Mutual,  336 
Theobald  v.  Railway  Passengers'  Co., 

106,  222,  445,  449 
Thomas  ».  Times  and  Beacon  Co.,  IS* 
Thomp.son  v.  Charnock,  209 
Thompson  v  Grant,  281 
Thompson  v-  Insurance  Co-,  91,  92 
Thompson  ».  Montreal  Insurance  Co., 

11,  108,  123,  124,  125,  129 
Thompson  v.  Spiers,  432,  472 
Thompson  v.  Taylor,  41 
Thompson's  Trustees  v.  Thompson,  329 
Thomson  v.  Weems,  89,  140,  143,  144, 

146,  150,  157 
Thurburn  v.  Steward,  417 
Thurtell  v.  Beaumont,  116,  119,  201 
Tibbitts  r.  Hamiltou  Mutual,  33 
Tidswell  v-  Angerstein,  65,  67 
Times  Fire  Co  v.  Hawke,  251,  254 
Times  Life  Co ,  lie.    See  Ex  parte, 

Nunneley,  412 
Titus  V.  Glenfall's  Co.,  204 
Todd  V.  London,  Liverpool,  Ac,  Co.,  01 

Todd  V.  Morehouse,  327,  352 

Tolman  v.  Marmfacturers'  Co.,  258 

Tooley  v.  Hail  way  Passengers  Co., 
459 

Towle  V.  National  Guardian  Co.,  43, 
469 

Traill  r.  Baring,  159,  266 

Transatlantic  l^irc  Co.  v.  Dorsey,  114 

Trask  v.  insurance  Co.,  188 

Travellers'  Co.  v.  Seavers,  130 

Tredwen  v.  Holman,  211 

Trew  V.  Railway  Passengers'  Co ,  455 

Tristou  V.  Hardy,  389 

Troop  V.  Anchor,  78 

Tuck  V.  Hartford  Co.,  239 

Tucker  «.  Provincial  Co.,  428 

Turbervillo  v.  Stamp,  270,  271 

Tyrie  v.  Fletcher,  7,  81,  83,  84,  101 


Undeiihill  v.  Agawam  Co.,  198 
Underwood's  Case.  861 
Union  Marino  v  Martin,  261,  264 
Unitarian    Congregation    v.    Western 

Assurance  Co ,  246 
United  Kingdom  Life  Co ,  lie,  868 
United  Kingdom  Life  Co.  v.  Dixon,  808 
Universal  Life  Co.  v.  Buchus.  415 
Universal  Non-Tariff  Co.,  lie  Forbes' 

Claim,  90,  155,  166,  160 
Uzielli  V.  Boston  Insurance  Co< 

261 


Vance  r.  Foster,  194,  223,  257 

Van  Zandt  v.  Mutual  Benefit  Life,  133 

Vaughan  v.  Menlove,  271 

Vernon  v.  Smith,  253,  273 

Vezina  v.  New  York  Life  Co.,  40,  46, 

306 
Vibbon  ».  Marsouin,  335 
Von  Lindenau  v.  Desborough,  67 
Von  Wein  v.  Scottish,  76,  444 
Vyse  ».  Wakefield,  131,  321 


Wainwbioht  v.  Bland,  39,  86,  131,  152 
Walden  t;.  Louisiana  Insurance  Co.,  117 

Maitland,  6 

Provincial  Insurance  Co.,  428 


Walker  v. 
Walker  v. 
Walker  v. 
Wallace  v 


Western  Insurance  Co  ,  196 


259, 


Insurance  Co.,  3,  27,  253 
Waller  v.  Northern,  Ac,  Co.,  467 
Wallis  V.  Hirsch,  213 
Wanti;.  Blunt,  79,  80,  93,  104,  166 
Ward  V.  Audlaud,  316 
Ward  V.  Beck,  68 
Ward  V.  Day,  204 
Ward  V.  Ward,  316 
Wardley,  Ex  parte,  459 
Waring  v.  Indemnity  Fire  Co.,  46 
Warnock  «.  Davis,  2,  10,  111 
Warwicker  v.  Bretnall,  267 
Wastropp  V.  Bruce,  135 
Watchurn  v.  Langford,  33 
Waterloo  Insurance  Co.,  Be,  306 
Waters  «.  Merchants'  Co.,  114 
Waters  v.  Monarch,  56,  58,  60,  63,  242 
Watkinst).  Reymill,  24 
Watson  V.  Muinwaring,  137,  141 
Wattt).  Union  Insurance  Co.,  117,  118 
WauKh's  Trusts,  854,  355 
Waydell  v.  Provincial,  183,  191 
Webo's  Policy,  858 
Webb  V.  Protection  Co.,  124 
Webster  ».  British  Kmpire  Co.,  315,  816 
Webster  ».  De  Tastet.  44 
Weems  v.  Standard  Life 

146,  160,  167 
Weigall  V.  Waters,  278 
Weirw.  Bell,  436 
Weir  V.  Northern  Counties  Co. 
Welles  t).  Boston  Co.,  11 
Welsh  V.  Reynolds,  420 
Wernick's  CW,  418 
West  V.  Reid,  820,  478 
Western  Insurance  Co.  v.  Attwell,  178 
Western   Insurance  Co.  v.   Provincial 

Insurance  Co.,  485,  480 
West  of  England  Bank  v.   Batcholor. 

856 


Co.,  143,  144, 


100 


LIST  OF  CASES. 


xxvil 


[The  paging  refers 

J        Weston  V.  Richardson,  308 

i         Westport  Union  v.  Omalley,  467 

4        Westropp  V.  Bruce,  140 

I         Wheelton  v.  Hardisty,  8,  441,  443 

3        White  V  British  Empire  Co.,  187,  324 

I        White  V.  Lancashire  Fire  Co.,  428 

White  V.  Republic  Insurance  Co.,   115, 
f  123 

Whitehaven  Bank  Case,  411 
Whitehead  v.  Price,  109,  147 
Whiting  V.  Massachusetts  Co.,  92 
Whittingham  v.  Thornbrugh,  87,  88,  386 
Whyte  V.  Home  Insurance  Co-,  63 
Whyie  V.  Western  Insurance  Co.,  193 
Wienholt  v.  Roberts,  428 
,         Wiggins  V.  Queen  Insurance  Co  f  189 
Wight  V.  Brown,  85 
Wilkinsv-  Germania,  148 
Wilkinson  v.  Coverdale,  441 
Willesford  v.  Watson,  211,  212,  216 
Williams  v.  Atkins,  342,  844,  347 
Williams  v.  Hartford  Fire  Co  ,  262 
Williams  v.  North  China  Insurance  Co., 

4,  27,  54,  438 
Williams  v.  Thorpe,  314,  472 
Williamson  v.  Commercial  Union,   167 
,1         Williamson  v.  Gore  District  Co.,  248 
I         Willis  V.  Pole,  149 
1         Wilson  V.  Citizens,  62 
'•V         Wilson  V.  Genesee  Co.,  424 

Wilson  V,  Glasgow  Tramway,  464 

Wilson  V  Jones,  89,  41,  46 

Wilson  V.  Uoydj  403 

Wilson  V.  Rankin,  44 

Wilson  V.  State  Insurance,  184 

Wilson  V.  Wilson,  276 

Windus  V.  Tredegar,  92 

Wing  V.  Harvey,  76,  78,  161,  165,  184, 

204,  430,  432 
Winspear  v.  Accidental  Co.,  456 
Winston's  Case,  889 


to  the  [•]  paging.] 
Winthrop  v.  Murray,  322 
Winter  v.  Easum  336 
Witherell  v.  Maine  Insurance  Co  ,  11, 

115 
Witt  V.  Amis,  807,  308 
Wood'sCase406,  407,  411 
Wood's  Claim,  90 
Woodward  v.  Republic  Fiie  Co.,  84 
Woolf ».  Horncastle,  63,  71,  438 
Wordley,  Ex  parte,  473 
Worrall  v.  Johnson,  367 
Worseley  v.  Wood,  145,   146,  150,   187, 

191,  192 
Worth  ington  v.  Curtis,  40,  73 
Wright  V.  London,  &c..  Co.,  393 
Wright  V.  Pole,  215,  222 
Wright  V.  Sun  Mutual  Co.,  86,  371 
Wright.   Ward,  ail 
Wyatt's  Case,  899 
Wylie  V-  Times,  22 
Wyman  v.  Wvman,  304 
Wynkoop  v.  Niaara  Co.,  251,  263 
Wynne's  Case,  408 


Xenos  v.  Wickham,  22,  441 


Yai.lop,  Ex  parte,  6f! 

Yates  V.  Dunster,  276 

Yates  V.  White,  227,  229 

Yeaton  v.  Fry,  172 

Yonker's  Fire  Co.  v.  Hoflfman  Fire  Co., 

259 
Young  V.  Mutual  Life,  75 
Young  «.  Union  Co.,  66 
Young,  Ex  parte,  866 


I 


111. 

Iowa 


LIST  OF  ABBREVIATIONS 

BY  WHICH  AMERICAN  AND   COLONIAL  REPORTS,  Ac,  ARE  RE- 
FERRED  TO  IN  THIS  WORK. 


Ala.  = 

All  (New  Brans.) 
Amp.  Rep. 
Aiigell  Insur. 

Barb.  N.  Y. 
Bissell,  U.  S.  C.  Ct 
Bliss  Life  Ins. 
Hlatchford,  U.  S. 
Bush,  Ky. 

Cape  (East  Distr.)  Rep. 
Can.  S.  C 
Caines,  N.  Y. 
Conn. 
Cranch,  U.  S. 

Da.  Sup  Ct.  U.  S. 
Dill.  C  Ct.  U.  S. 

Fed.  Rep.  (U.  S.) 

Grant,  U.  C. 
Oratt,  Va. 

Hall,  N.  Y. 
Hand,  N.  Y. 
Han  New  Brans. 
Holmes,  U.  S.  C.  Ct. 
Howard,  U.  S, 
Hughes,  U.  S.  C.  Rep. 
Hun,  N.  Y. 

HI. 
Iowa 

Johnson,  N.  Y. 

Kent.  Coir" 

Louis,  or  La. 
Louis.  Ann- 
Lansing,  N.  Y. 
Lr.  Can.  Jur. 
Lr.  Can.  Rep. 


Alabama  Reports. 

Allen's  New  Brunswick  Reports. 

American  Rep...  ^ 

Angell  on  Insurance. 

Barbour's  Reports,  Supreme  Court  New  York. 
Bissell's  Rejports,  United  States  Circuit  Court. 
Bliss  on  Lite  Insurance. 

Blatchford's  Circuit  Court  Reports,  United  States. 
Bush's  Reports,  Kentucky. 


Cape  of  Good  Hope  Eastern  District  Reports. 
Ci 

Connecticut  Reports, 


Canada  Supreme  Court  Reports. 
~  ■     •    ~  "      "  rk. 


Davis  Reports,  Supreme  Court  United  States 
Dillon's  Reports,  Circuit  Court  United  States. 


Caine's  Reports,  New  YorS 

Connecticut  Reports. 

Cranch's  Reports,  United  States. 

spc 
Re 

Federal  Reports,  United  States. 

Grant's  Chancery  and  Appeal  Reports,  Upper  Canada. 
Grattan's  Reports,  Virginia. 

Hall's  Reports,  New  York. 
Hand's  Reports,  New  York. 
Hannay's  Reports,  New  Brunswick. 
Holmes'  Reports,  United  States  Circuit  Court. 
Howard's  Reports,  Supreme  Court  United  States. 
Hughe's  Reports,  United  States  Circuit  Court. 
Hun's  Reports,  New  York. 

Illinois  Reports.  ' 

Iowa  Reports. 

Johnson's  Reports,  New  York. 

Kent's  Commentaries. 

Louisiana  Reports. 
Louisiana  Annual- 
Lansing's  Reports,  New  York- 
Lower  Canada  Jurist. 
Lower  Canada  Reports.  ^ 

(xzix) 


XXX 


LIST  OF  ABBREVIATIONS. 


Maine  •= 

May  In& 

Missouri 

Maryland 

Mass.  Cush. 

Mass.  Met. 

Mass.  Pickering 

Mass.  Gray 

Mass.  Allen 

McCrary(U.S.Cir.a) 

Mich. 

Minnesota 

N.  H. 

N.  S.  W.  Law 

N.  Y.  Comst. 

N.  Y.  Sup.  Ct.  Stanford 

N.  Z.  Sup.  Ct. 


Ontario  App. 

Paige,  N.  Y.  Ch 

Pen. 

Peters,  U.  S. 

Phil. 

P.  &  B.,  New  Bruns. 

Robinson  La. 

Rus.  &  Oel 

Russ.  &  Ch.  Nov.  Sco. 

Stanford,  N.  Y.  Ch. 
Sawyer  U.  S.  C.  Ct. 
Sickell  N.  Y. 
Story  Agency 
Story  Reports 
Sum.  Rep. 
Sana  or  Sansum 
Stevens  Quebec  Dig 
Stuart  Lr.  Can. 

T^  C.  Q.  B. 
r.  C.  C.  P. 
V   vj.  tilr.  &  App. 
i        Otto 

.u  Law 

Wall. 

Wash. 

Watts  &  Sen.  Penn. 

Wend.  N.  Y. 

Wis. 


Maine  Reports. 

May  on  Insurance. 

Missouri  Reports. 

Maryland  Reports. 

Cushing's  Massachusetts  Reports. 

Metcalfe's  Massachusetts  Reports. 

Pickering's  Massachusetts  Reports. 

Gray's  Massachusetts  Reports. 

Allen's  Massachusetts  Reports. 

McCrary  United  States  Circuit  Court  Reports. 

Michigan  Reports. 

Minnesota  Reports. 

New  Hampshire  Reports. 

New  South  Wales  Law  Reports. 

Comstock's  New  York  Reports. 

Sandford's  Reports,  New  York  Supreme  Court. 

New  Zealand  Supreme  Court  Reports. 


Ontario  Appeals. 

Paige's  Chancery  Reports,  New  York. 

Pennsylvania  Reports. 

Peters'  Reports  United  States. 

Phillips  on  Insurance. 

Pugsley  &  Burbridge  New  Brunswick  Reports. 

Robinson  Louisiana  Annual. 

Russell  &  Oelder  Nova  Scotia  Reports. 

Russell  &  Chesley,  Nova  Scotia  Reports. 

Sandford's  Chancery  Reports  New  York. 
Sawyer's  United  States  Circuit  Court  Reports. 
Sickell's  New  York  Reports- 
Story  on  Agency. 
Story's  Reports. 
Summer's  Reports. 
Sansum's  Digest. 
Stevens'  Quebec  Digest. 
Stuart's  Reports  Lower  Canada. 

Upper  Canada  Queen's  Bench  Reports. 
Upper  Canada  Common  Pleas  Reports. 
Upper  Canada  Error  and  Appeal. 
Otto's  Reports  Supreme  Court,  United  States. 

Victoria  Law  Reports. 

Wallace's  Report,  United  States. 
Washington's  Reports  United  States. 
Watts  k  Seijeant,  Pennsylvania. 
Wendell's  Reports,  New  York. 
Wiscousia  Reports. 


f! 


THE  LAWS  OF  INSURANCE. 


CHAPTER  I. 


NATURE  OF  THE  CONTRACT  OF  INSURANCE. 

Purpose  of  insurance. — The  aim  of  all  insurance  is  to  make  pro- 
vision against  the  dangers  which  bedet  human  life  and  dealings. 
Those  who  seek  it  endeavour  to  avert  disaster  from  themselves  by 
shifting  possible  losses  on  to  the  shoulders  of  others  who  are 
willing,  for  pecuniary  consideration,  to  take  the  risk  thereof;  and 
in  the  case  of  life  insurance,  they  endeavour  to  assure  to  those 
dependent  on  them  a  certain  proyi&ion  in  case  of  their  death  (a), 
or  to  provide  a  fund  out  of  which  their  creditors  can  be  satisfied. 

Those  who  grant  insurance  imdertake  such  risks  at  a  price  and 
upon  calculations  which,  if  well  adjusted,  will  leave  them,  after 
providing  against  all  contingencies,  a  fair  profit  on  the  capital 
which  they  adventure.  In  insurance  business  there  is  a  tendency, 
as  in  all  others,  to  reduce  such  profit  to  the  lowest  margin,  and 
most  insurers^  in  effect  grant  by  way  of  bonus  a  rebate  on  the  pre- 
miums originally  demanded,  whereby  they  correct  errors  in  ttieir 
own  favour  made  in  estimating  the  premiums  charged  for  the  risks 
taken,  or  make  the  business  of  insurance  mutual  rather  than  com- 
mercial. 

Principle  of  insurance  is  idemnity. — The  controlling  principle  in 
insurance  law  is  idemnity,  and  by  reference  to  that  principle 
most  difficulties  %risin^  on  insurance  contracts  must  be  ["^  2  ] 
settled  (6^.  Except  in  insurance  on  life  and  against  acci- 
dent, which  will  oe  presently  discussed,  the  insurer  contracts  to 
idemnify  the  assurea  for  what  he  actually  loses  by  the  happen- 
ning  of  the  events  upon  which  the  insurer's  liability  is  to  arise ; 

(a)  1  Bell  Comm.  646  (7th  edition). 

\b\  Caatellain  v.  iVwtow,  11  Q.  B.  D.  880  at  886,  per  Brett,  L.  J. 

^  This  refers  strictly  to  mutual  insurance-  The  principle  which  lies  at  the 
foundation  is  mutuality,  in  other  weds,  each  member  has  a  voice  in  the  man- 
aeement  of  the  affairs  of  the  company,  and  participates  in  the  profits  and  lossei 
of  the  business. 

May  on  insurance,  2d  chap.,  25.  Smith  v.  Hunterdon  County  Mutual  F.  Ins* 
Co.,  41  N.  J.,  eq.  478. 

81 


3 


THE   LAWS  OF  INSURAXCE. 


i| 

i' 
1 ' » 


',1 , 

If 


and  under  no  circumstances  is  the  assured  in  theory  entitled  to 

"wLefhb  L't^M^^^^^^^^^  to  the  contract  would  not  have 

a  common  interest  in  the  preservation  of  the  thing  insured  ^nd 
the  contract  would  create  a^esire  for  the  happening  of  the  event 

Zred  against  (d).    And  where  in  fe^V^r^t^fiorto  CTo 
of  profit,  there  and  there  only  can  arise  the  temptation  to  fraud,  or 
such  carelessness  as  will  bring  about  the  destruction  of  the  thing 

^^^Indemnitv  not  always  cmnplete.— The  contract  is  not,  however, 
necessarily  one  of  perfect  indemnity  (e).  No  insurer  now  takes 
the  risk  of  the  destruction  of  what  he  insures  by  all  perils  whatso- 
ever. As  a  man  of  business,  he  must  take  a  nsk  which  he  can 
estimate,  for  the  two  reasons  that  his  capital  is  not  unlimited,  and 
that  the  reward  he  receives  for  his  liability  must  be  calculated 
with  some  reference  to  the  prospect  of  bis  actually  incurring  the 
liability.  And  the  insurer  not  only  does  not  insure  against  all 
risks,  but  will  not  insure  to  an  unlimited  amount.  The  amount 
ofinsurance  is  controlled — 

1.  By  the  value  of  the  thing  insured.  If,  however,  the  assured 
is  respectable,  his  valuation  of  his  goods  is  usually  taken;  and  in- 
surers, if  the  risk  is  not  great,  do  not  object  to  over-insure  m  order 
to  earn  a  higher  premium,  since  they  know  that  they  will  only  be 

liable  for  the  actual  loss. 
[*  3  ]  *2.  By  the  general  consideration  of  the  insurer's  business. 
Most  insurers  will  not  insure  above  a  certain  amount  on  any 
property  or  life,  and  either  decline  the  surplus,  or,  if  they  accept 
it,  reinsure  their  liability  thereon  with  some  other  insurer,  bo  as  to 
divide  the  liability  thusinsured. 

Further,  the  insurer  will  not  insure  every  form  of  i)roperty  nor 
every  interest  therein.  Insurable  value. — The  contract  is  in  its  in- 
ception mercantile,  and  the  only  value  insurable  is  the  commercial 
value  of  the  thing  insured.  An  insurer  will  not  pay  a  man's  losses 
at  his  own  price  or  compensate  him  for  his  feelings  at  the  burning 
of  an  heirloom,  but  only  for  his  loss  so  far  as  it  is  estimable  in 
money  on  ordinary  business  principles.  And  there  are  many  kinds 
of  property,  such  as  documents  of  title  and  negotiable  instruments, 
which,  while  of  great  value  in  a  certain  sense,  are  so  only  as  evi- 
dences of  title,  and  as  such  are  not  proper  subject-matter  of  insur- 
ance, or  not  insurable  on  the  same  calculations  as  other  property. 

Extent  of  inmrer^s  liability, — The  insurer,  by  limiting  the  amount 
up  to  which  he  insures,  does  not,  except  in  a  valued  policy,  bind 
himself  absolutely  to  pay  the  whole  amount  if  the  thing  insured  is 
destroyed,  and  he  is  not  estopped  from  demanding  proof  of  the 

(c)  Same  case.     Vide  also  52  L.  J.  Q.  B.  806,  49  L.  T.  N.  S.  20,  81  W.  R. 
657. 

(d)  Wamock  v.  Davis,  104  U.  S.  (14  Otto)  775. 

(«)  Aitchison  v  Lohre,  4  Ann.  Cas.  755,  49  L.  J.  Q.  B.  128,  41  L.  T.  N,  S 
828.  28W.  R  1. 

82 


£ 


NATURE  OF  CONTKACT. 


♦6 


Si* 


•I 


actual  loss  caused  bv  the  perils  insured  against  His  undertaking 
is  only  to  indemnity  for  loss  actually  suffered  not  exceeding  the 
amount  named  in  the  policy. 

Valued  policy. — In  valued  policies*  (which,  though  not  unlawful, 
are  rare  in  the  case  of  land  insurances  on  property)  (/)  the  value 
is  agreed,  and  such  value  is  conclusive  for  all  purposes  against  the 
insurer,  unless  he  impugns  the  good  faith  of  tne  assured  in 
making  the  valuation  (gr),  or  shows  over-valuation  to  bo  *so  [  *4  ] 
great  that  knowledge  thereof  would  have  affected  the  insur- 
ers willingness  to  take  the' risk  (A) 

And  even  where  for  convenience  the  value  is  agreed,  proof  of 
loss  total  or  partial  must  be  made  to  entitle  the  assured  to  recover 
on  the  contract-  Thus  it  is  said  in  a  very  early  case,  that  where  a 
policy  is  granted  on  the  goods  of  "A."  without  account,  ho  must 
prove  that  his  goods  were  shipped  and  lost,  but  not  the  particu- 
mrs(i). 

Results  of  principle  of  indemnity. — The  consequences  of  tho  prin- 
ciple of  indemnity  are  briefly  as  follow : — 

1.  Only  what  has  been  actually  lost  need  be  made  good,  whether 
by  payment  or  reinstatement,  i.  e.,  restoration  of  the  thing  dam- 
aged to  its  original  condition,  or  construction  of  a  new  thing  simi- 
lar to  it.  No  more  than  the  amount  of  loss  can  be  lawfully  re- 
covered, and  if  more  is  recovered  the  insurer  can  get  it  back  again 
if  he  paid  unawares  {k). 

2.  If  tho  thing  insured  is  not  totally  destroyed,  but  remains 
wholly  or  in  part  in  a  deteriorated  or  damaged  condition,  the  in- 
sured can  only  claim  the  value  of  tho  injury  actually  done,  unless 
all  that  remains  of  the  thing  insured  be  surrendered  to  the  insurer. 
If  the  assured  does  not  agree  to  treat  tho  thing  as  wholly  lost  to 
him,  he  cannot  ask  to  h.ave  it  wholly  mado  good  to  him  (I).  This 
rule,  commonly  called  the  doctrine  of  abandonment,  is  chiefly 
applied  in  marine  insurance,  but  is  equally  a{)plioable  to 

all  insurances  on  property  (m.)  *The  only  questions  arising  [*  6  ] 
under  it  in  land  insurance  are  as  to  what  degree  of  damage 
will  entitle  the  assured  to  abandon  the  property  to  the  insurer,  to 
make  what  he  can  of  it,  and  when  the  insurer  can  insist  on  tho  as- 

(/)  3  Kent  Comm.  375,  note  d.  2  Phillips,  a.  1211  et  seq.  Wallcute  v.  Insur- 
ance Co ,  4  Louisiana  0.  S.  280. 

(g)  Baker  v.  Janaon,  16  W.  R.  300,  L.  R.  8  C.  P.  303,  87  L.  J.  C.  P.  105. 

(A)  lonides  v.  Pender,  L.  R.  9  Q.  B.  531,  43  L.  J.  Q.  B.  2:27,  30  L.  T.  N.  8. 
647  22  W,  R,  884. 

(t )  Wiliiams  v.  North  China  Insurance  Co>,  1  C.  P.  D.  757,  7G5,  05  L.  T.  N. 
8.  884.    Kaina  v.  Knightli/,  Skinner  64. 

(k)  See  Darrcll  v.  Tibbits,  5  Q.  B.  D.  600,  m\  60  L.  J.  Q.  B.  33,  42  L.  T.  N. 
B.797,29W.R,  66. 

(I)  Pbtter  V.  Rankin,  6  H.  L.  C.  118. 

(m)  Castellain  v.  Preston.  11  Q.  B.  D.  880,  52  L.  J.  Q.  B.  800,  49  L.  T.  N.  S. 
39,  81  W.  R.  567.  M'Kmae  v.  }VhitmHh,  1  Ex.  D.  36,  45  L.  J.  Ex.  238.  83  L 
T.  N.  S.  655,  24  W.  R.  287. 

■See  Wood  ou  Insurance,  Vol  1,  )>.  06  to  107  ina 

3  PORTBB  ON  ZN8URANCB.  tt 


♦6 


THE  LAWS  OP  INSURANCE. 


Ill 
11 


Bured  keeping  the  damaged  property  and  receiving  the  amount  of 
the  damage.  The  solution  of  these  questions  depends  on  wheth  i- 
the  identity  of  the  property  has  been  lost  by  the  happening  of  the 

peril  (n).  ,  x  i.-     x  • 

3.  If  the  assured  has  any  ways  and  means  open  to  him  W)  repair 
his  loss  otherwise  than  at  his  own  expense  or  at  the  cost  of  his  in- 
surer, he  must  either  cede  such  ways  and  means  to  the  insurer  on 
being  paid  in  full  the  amount  of  his  loss,  or  he  must  exercise 
such  ways  and  means  for  the  benefit  of  the  insurer  (o).  He 
may  not  take  with  both  hands.  Any  surplus  recovered  by  him  in 
excess  of  his  actual  loss  he  holds  in  trust  for  an  insurer  who  has 

gaid  him.  And  while,  if  the  insurance  does  not  fully  compensate 
im,  lie  is  entitled  to  control  any  action  brought  against  other  per- 
sons primarily  responsible  for  the  loss  (/>),  he  cannot  even  in  such 
a  caFO  exonerate  such  other  persons  from  liability  (q).  An  unin- 
sured man  can  release  a  right  of  action  arising  out  of  his  loss,  but 
a  man  who  is  insured  may  not  release  such  claim  in  such  a  way 
as  to  prejudice  his  insurers.  Either  such  release  will  be  ineflfectual, 
and  tho  insurer  will  bo  able  to  sue  in  the  insured's  name,  the  re- 
lease notwithstanding  (r),  or  the  assured  will  bo  liable  (as  for  a 
breccli  of  trust)  for  granting  such  release  contrary  to  his  duty  aris- 
ing out  of  (ho  contract  of  insurance  («). 

Subrogation. — This  right  of  tho  insurer,  which  is  termed 
[  6  *]  subrogation,  *does  not,  however,  apply  in  cases  where  insured 
property  is  injured  by  acts  for  which  the  Assured  would  have 
been  in  law  responsible  if  the  property  had  not  been  his  own. 

Thus,  where  two  ships,  owned  hy  the  same  man,  collide  by  the 
fault  of  one,  the  insurers  of  the  ship  not  in  fault  have  been  held 
not  to  bo  entitled  to  make  any  claim  on  the  owner  for  the  act  of  the 
other  ship,  though  the  insurers  of  tho  cargo  would  have  such  claim 
against  the  shipowner  (t). 

Tho  reason  for  this  apparent  variation  from  the  rule  already 
stated  is  twofold — 

1.  That  insurers  take  tho  risk  of  the  assured's  negligence  as  part 
of  the  risk  against  which  they  insure  (u). 

2.  That  tho  assured  in  the  case  cited  could  have  no  action 
against  himself  for  the  injury  done  by  his  one  ship  to  his  other, 
and  that  there  is  in  such  a  case  no  right  to  which  the  insurer  could 
on  payment  succeed. 

Position  inter  se  of  insurers  of  the  same  property.— Insmcra  of  the 
same  interest  in  tho  same  property  all  rank  together  for  purposes 
of  mooting  a  loss. 

(n)  Castdlain  v.  Freaton,  11  Q.  D.  D.  880,  397,  per  Bowen,  L.  J.  "^ 

io)  Ibid.  ' 


(p)  Commercial  Union  v.  LUter,  9  Ch.  App.  488,  4a-),  43  L.  J  Ch. 
iq)  Smidmore  v.  Australian  Gas-light  Co.,  2  N.  S.  W.  Law  219. 
jr)  Ibid. 

,»)  Commercial  Union  v.  Lister,  supra,  por  Jcssel.  M.  R. 

t)  btmmion  v.  Thompson,  8  App  Cas.  279,  284,  88  L.  T.  N.  S.  1. 

(u)  Walker  v.  Maitland,  6  B.  &  Aid.  171.  *  i-    o- 1. 

84 


601. 


NATURE  OF  CONTRACT. 


*8 


Their  position  is  analogous  to  that  of  co-sureties  (x),  and  they 
are  enlitled  to  insist  upon  contribution  inter  ae  proportionably  to 
the  amount  each  has  at  stake.  More  than  the  whole  loss,  as  has 
been  seen,  may  not  be  paid,  and  their  several  contracts  are  taken 
together  as  parts  of  one  contract  of  indemnity,  each  paying  accord- 
ingly. 

*AleaUmj  contract.  Difference  between  contract  of  insurance  [*  7  ] 
and  wager. — Insurance  is  at  times  an  aleatory  contract.  So 
far  as  this  means  a  contract  involving  risk  or  speculation,  the  term 
is  well  applied,  since  it  is  certainly  a  contract  of  mutual  risk  (y\ 
wherein  the  premium  is  risked  against  the  chance  of  loss.  But  if 
aleatory  be  taken  to  mean  gaming  or  wagering,  the  term  is  mis* 
applied  to  insurance,  for,  although  risk  is  of  the  essence  of  the 
contract  (2),  the  assured  is  moved  to  eflTect  insurance  by  the  risk 
of  loss,  and  does  not  create  the  risk  of  loss  by  tho  contract  itself, 
as  is  the  case  in  a  pure  wnger ;  for  in  a  pure  wager  the  interest  of 
tho  contracting  parties  in  the  event  wagered  on  is  created  by  tho 
the  fact  that  they  have  contracted  to  pay  each  other  certain  sums 
in  a  certain  event,  but  that  neither  sum  is  duo  until  the  event  has 
been  decided  one  way  or  other :  whereas  in  insurance  the  motive 
for  the  contract  springs  from  the  existence  of  something  which 
may  bo  lost,  and  the  danger  of  loss  thereby  to  the  pert^on  who 
seeks  insurance.  And  such  person  pays,  and  not  merely  risks 
money,  in  order  to  obtain  Fccurity  against  the  ])ossible  loss.  In 
fact,  unless  the  property  insured  is  for  a  timo  subjected  to  tho  lUk 
insured  against,  tho  contract  of  insurance,  even  if  m;ide,  never 
operates,  and  tho  premium,  though  paid,  is  repayable;  wiiich 
illustrates  yet  further  the  ]>rinci]>lo  that  the  person  seeking  insur- 
ance must,  for  tho  contract  to  be  effectual,  have  had  some  prospect 
of  needing  indemnity  against  losing  tho  thing  insured  wiihin  the 
period  of  insurance.  From  this  it  may  be  seen,  that  effecting  a 
contract  of  insurance  does  not  oblige  tho  insured  to  run  the  risk 
named  in  the  contract;  for  the  contract  being,  as  already  said, 
contingent  on  tlio  actual  attaching  of  the  risk,  is  nr>t  enforceable 
by  eitlier  paity  till  tho  risk  is  run;  and  premium  paid  before  risk 
begun  U  paid  subject  to  such  contingency  («). 

IVhen  policy  attaches. — While  a  policy  does  *notattnch  till  [•''  8  J 
the  risk  begins,  it  can  equally  not  attach  after  tho  ri-k  is  de- 
termined one  way  or  other,  except  in  those  special  int-urnnces 
when  both  parties,  bdng  equally  ignorant  of  tlio  i)Osition  of  tho 
thing  insured,  contract  to  insure  it  lost  or  not  lost. 

Insurance  and  suretyship  compared. — Tho  similarities  between  in- 
surance and  suretyship  go  far  to  prove  further,  if  lu -'he  r  ]>roof 
were  needed,  that  insurance  is  not  a  wagering  contract.    In  both 


(.t)  Castellam  v.  Prenton,  11  Q.  D.  D.  080,  at  CS7,  C'J,  L.  J.  Q.  B.  CCO.  49  L. 
T.  N.  S.  2!),  81  W.  R.  587.  »  .      .  s,  ,       u, 

iy)  Scottish  F.quitable  v.  liuist,  4  Court  Scss.  Cas.  (4tli  scries)  107G. 
t)  Tyrie  v.  Fletcher,  2  Cowner,  C08. 
a)  Rid.  GGU. 

35 


»♦ 


THE  LAWS  OF  INSURANCE. 


contracts  there  is  no  chance  of  loss  and  an  undertaking  to  indem- 
nify: but  no  one  has  ever  yet  termed  suretyship  a  wagering  con- 
tract. The  aim  under  each  contract  is  not  to  get  favourable  odds, 
but  a  sound  security,  and  the  contracts  aim  at  shiilmg  the  danger 
of  loss,  and  not  at  creating  an  opportunity  of  gain.  And  it  may 
be  observed  that  from  the  earliest  times  in  this  country,  a?  may  be 
seen  by  the  treatise  of  Malyns  (1622)  and  the  Statute  ol  Assur- 
ances (43  Eliz.  c.  12),  insurance  has  been  regarded  as  a  means  ot 
distributing  the  rislc  of  loss  and  dividing  adventures  (i.  e.,  risky 
mercantile  enterprises)  among  a  number  of  persons. 

And  when,  in  1861,  the  City  of  London  attempted  to  establish  a 
fire  office,  the  aim  of  the  Corporation  was  not  to  profit  by  wager- 
ing contracts,  but  to  provide  a  security  (the  City  lands)  to  meet 
losses  by  fire  at  such  a  charge  as  would  indemnify  them  for  their 
liabilities. 

The  contract  is  vherrimoe  Jidei.— From  the  fact  that  insurance  is  a 
contract  to  shilt  risk  flows  the  second  great  principle  of  insurance 
law,  viz.,  that  the  contract  is  vherrimoe  fiaeif  one  requiring  the 
utmost  good  faith  on  both  sides  (b). 

This  rule  applies  to  every  form  of  insurances,  fire,  life,  or 
marine  (c),  though  not  quite  to  its  fullest  *extent  to  guar-  f *  9  ] 
antee  insurance,  which  comes  within  the  rules  of  suretyship. 

Asmre(V8  duty  to  disclose  Jacta  touching  risks. — Under  this  rule  com- 
plete disclosure  must  be  made  to  the  insurer  of  every  fact  going  to 
establish  the  character  of  the  risk  to  be  shifted  by  the  contract 
which  is  within  the  knowledge  of  the  insurer,  and  which  is  not 
matter  of  common  knowledge  or  speculation  or  rrero  opinion  (d). 
If  the  assured  keeps  back  information  which  goes  ta  r-^tablish  the 
risk,  or  which  would  affect  the  willingness  of  the  insuier  to  take  it 
(except  perhaps  information  as  to  his  the  assuredV  own  personal 
character,  as  he  cannot  be  expected  to  speak  ill  of  himscu )  (e),  lie 
will  take  nothing  by  the  contract,  but,  in  the  absence  of  fraud  or 
some  stipulation  to  the  contrary,  will  be  entitled  to  have  his  pre- 
mium, it  paid,  returned  to  him. 

An  insurer  aware  of  invalidity  of  contract  when  he  enters  into  it  is  es- 
topped.— And  where  the  insurer  grants  a  policy,  knowing  that  ho 
will  never  run  any  risk  thereunder,  whether  because  facts  invali- 
date it  or  the  risk  is  already  determined  in  his  own  favour,  he  will 
be  equally  subject  to  the  rule  of  good  faith,  and  will  cither  bo  es- 
topped from  impugning  the  contract  or  held  to  have  waived  any 
breach  of  warranty  or  misrepresentation  therein,  or  be  liable  to 
repay  the  premium  received. 

The  rule  applies  not  only  in  the  procuring  or  granting  of  the 


(b)  1  Arnoul(i6(5thed.). 

(cj  London  Assurance  v.  ManaeLU  CJi.  D  868,  867,  48  L.  J.  Ch  831  27 
W.  R.  444,  and  cases  there  cited  But  see  Whedton  v.  llardistu.  8  E.  &  B  232 
285,  27,  L.  J.  Q.  B .  241,  81  L.  T.  S03,  6  W.  R  539.  *^'  ''^'^^'  ^^^^ 

id)  Carter  v.  Boehm.  8  Burr.  1910. 

(e)  Sun  Mutual  Co.  v.  Ocean  Insurance  Co.,  107  U.  S.  (17  Otto)  486 

36 


ii)  A 

{Jc) 


i 


NATURE  OP  CONTRACT. 


♦11 


contract,  but  also  while  it  lasts  and  after  the  risk   has    hap- 
pened. 

Assured^a  duty  to  avert  the  happening  of  the  risk. — If  the  assured  ac- 
celerates the  happening  of  the  risk,  or  if,  when  it  occurs,  he  refrains 
from  doing  what  he  ought  to  lesson  the  damage  consequent  thereon, 
he  hazards  his  chf  .nces  of  recovering  on  the  contract.  The 
*true  view  on  this  subject  is  extremely  well  laid  down  in  a  [*10] 
recent  Canadian  case  (/)  as  follows : — 

Duties  of  assured  in  ca^e  of  fire. — "An  agreement  to  indemnify  an- 
other from  a  named  contingency  carries  with  it  the  provision  that 
the  person  to  be  protected  shall  neither  wilfully  cause  a  loss  nor 
purposely  increase  or  inflame  it  by  wilfully  refraining  from  such 
obvious,  easy,  and  ordinary  exertion  as  may  be  always  reasonably 
expected  from  a  person  willing  to  act  honestly  towards  him  to 
whom  he  looks  for  indemnity  (g).  If  the  assured  wilfully  prevents 
the  interference  of  others  to  save  the  goods  which  would  otherwise 
be  destroyed,  or  the  working  of  the  fire  engines,  &c.,  to  extinguish 
the  fire,  preferring  to  see  them  destroyed,  in  reliance  on  his  insur- 
ance, he  thereby  commits  a  fraud  on  the  insurers,  which  releases 
them  from  their  contract"  (h). 

"Where  he  wilfully  refrains  from  and  neglects  to  save  the  insured 
property,  having  no  reasonable  excuse  therefor,  and  having  ample 
means  at  his  disposal  so  to  do,  I  think  alike  rule  should  apply.  If 
a  man  have  an  insurance  on  valuable  jewellery  kept  in  a  small  box 
of  light  weight  and  readily  portable,  if  he  see  the  house  in  which 
he  and  they  are,  on  fire,  and  he  willfully  and  intentionally  leaves 
the  box  to  be  consumed  when  he  could  readily  remove  it,  prefer- 
ring to  rely  on  his  insurance,  the  mind  naturally  revolts  from  such 
conduct,  as  evidencing  a  dishonest  mind  and  a  fraudulent  disre- 
gard of  the  rights  of  others  "  (i).  The  Court  in  this  case  was  care- 
ful to  say  that  any  act  of  the  assured  preventing  his  goods,  &c., 
being  saved,  to  disentitle  him  from  his  remedy  under  the  policy, 
must  be  done  with  the  frauflulent  intention  and  purpose  of  throw- 
ing the  loss  on  the  insurers  (fc). 

^Assured  will  not  bear  whole  expense  of  saving  propertxj. — [^ll") 
This  rule,  of  course,  has  its  other  side,  that,'  if  a  man  is 
bound  to  do  his  best  for  the  insurer  in  case  of  a  fire,  he  is  not 
bound  to  do  so  at  his  own  cost,  the  risk  insured  against  having 
accrued.  This  result  is  well  stated  in  an  American  case,  WllhereU 
v.  Marine  Insurance  Company,  49  Maine,  200,  206. 

Saving  property. — If  duty  requires  the  occupants  of  a  house 
which  is  in  danger  of  being  destroyed  by  fire  to  carry  their  prop- 
erty out  of  the  door,  or  even  to  throw  it  from  the  windows  rather 
than  permit  it  to  become  a  prey  to  the  flames,  they  ought  not  to 


(/)  Devlin  v.  Queen  I.tsurance  Co.,  46  U.  C.  (Q.  B.)  611,  621. 

ig)  See  also  Chandler  v.  Worcester  Insurance  Co.,  57  Mass.  (3  Cush.)  328. 
n)  Devlin  v.  Queen  Insurance  Co  ,  46  U.  C  (Q.  B. )  Oil,  022,  per  Hagarty,  C.  J. 
i)  Ibid.  46  U.  C.  (Q.  B.)  611,  023. 
{,k)  Baleatracci  v.  Firemen'a  Insurance  Co.,  34  Louisiana  Annual  844 

37 


♦  12 


THE  LAWS  OF  INSURANCE. 


be  the  losers  by  fulfilling  the  obligation  thus  imposed  upon  them; 
nr,r'tn  Tm/ke  any  nfatter  wheW  the  injury  anses  rom  ho 
fracture  of  a  mirror  or  other  piece  of  furniture  by  the  Ull,  or  ino 
KractioL  by  a  thief  of  a  bile  of  goods  when  ^J  reaches  t^^^^^^^^^^ 
ment  If  the  dancer  is  imminent,  even  though  the  event  shows 
Sa?  the  goods  would  not  have  suffered  at  all  if  left  alone,  the  in- 

Burers  are  still  liable.  .        ,    ^  v    •*  i  K,r  tu^  i-nioa  «f 

The  rule  is,  however,  to  a  certam  extent  limited  by  the  rules  of 
general  average  contribution,  and  the  insurers  will  not  in  every 
caac  bo  bound  to  meet  the  whole  of  such  cost.    Trms— 

Cost  of  attempt  toproUd  nelghbouriruj  h'Mse— In  nn  American  case 
(0,  blankets  wire  put  on  a  building  by  the  assured  to  protect  it 
from  combustion  through  a  neighbouring  fire.  The  insurers 
approved  of  the  act,  and  the  building  was  thereby  saved.  Ihe 
blankets,  however,  were  spoilt,  and  an  action  was  brought  by  the 
assured  against  the  insurer  for  the  cost  of  them.  It  was  held  that 
the  loss  was  not  covered  by  the  policy,  but  that  it  was  a  subject  of 
general  average,  to  which  the  insurer  and  the  insured  should  ( on- 
tribute  in  proportion  to  the  amount  which  they  respectively  had  at 
risk  in  the  store  and  its  contents.  It  was  also  held  that 
[*121  buildings  in  the  neighbourhood,  *which  would  have  been 
endangered  if  the  store  had  takti.  fire,  and  upon  some  of 
which  the  defendants  had  made  insurance,  were  too  remotely 
affected  to  be  liable  to  contribution. 

Whether  fire  policy  on  ship  liable  for  average.— There  is  no  ques- 
tion, of  course,  as  to  the  application  of  ihe  principle  in  marine  in- 
surance. American  and  English  (m)  Courts  have,  however,  dif- 
fered as  to  whether  a  fire  policy  on  a  ship  was  a  marine  policy  so 
as  to  be  liable  for  average.  But  in  England  it  is  very  common  to 
insert  an  average  condition  in  a  mercantile  fire  policy  which 
avoids  all  question  as  to  the  law  which  might  otherwise  be  doubt- 
ful, nverapo  not  being  in  its  inception  a  part  of  insurance  law  (n). 

Fire  po.  <  • — land  or  sea.  Contribution  from  neighbours. — In  any 
case  it  woi^d  seem  possible  to  take  a  valid  distinction  between 
policies  against  risk  of  fire  to  part  of  a  common  adventure  and 
rifik  of  firj  to  property  on  land  whose  owners  have  no  interest  in 
common.  It  was  on  this  principle  that,  in  Welles  v.  Boston  Insur- 
ance Company,  23  Mas?.  182,  the  Court  declared  that  a  man  who 
saved  Jtis  house  from  fire  at  cost  to  himself,  and  thereby  prevented 
the  spread  of  a  fire  to  other  parts  of  the  city,  could  not  seek  con- 
tribution from  adjoining  owners,  saying  that  it "  would  not  do  to 
take  so  wide  a  range  in  the  application  of  the  principle  of  contri- 

(l)  Welleit  V.  Boston  Co.,  23  Mass  (0  Pickering)  182.  But  see  Thompson  v. 
Montreal  Co.,  0  U.  C  Q,  B.  «1». 

(»i)  Imperial  Marine  Co,  v.  Fire  Insurance  Corporation,  4  C.  P  D.  160,  48 
L.  J.  C.  P.  424.  40  L.  T.  N.  8  lfl«  27  W.  R.  080 1  contra,  Merchants',  .frc. 
Co  V.  Associated  Fireman's  Co.,  80  Am.  Rep  428. 

(n)  Atchison  v  Ijohre,  4  App.  Cos.  756,  760,  4U  L.  J.  Q.  B.  128.  41  L.  T 
N.  8.  828  28  W.  R.  1. 

88 


i 


NATURE  OF  CONTRACT. 


♦  14 


bution.    All  the  buildings  in  the  city  may  remotely  have  been 
protected,  and  it  would  be  impossible  to  draw  the  line." 

Fniutlulent  int'^nt  may  be  inferred  from  gross  negligence  (o),  or 
from  forbearance  to  use  reasonable  exertions  and  means  at  hand  to 
put  out  a  fire  (p). 

*h  the  contract  of  life  insurance  a  contract  of  indemnity — Life  [*13] 
insurn  nco  has  been  already  mentioned  as  perhaps  an  exception 
to  the  general  principle  that  insurance  implies  indemnity.  It  would 
eeemlofollow  from  the  wordsof  theGambhng  Act  (14  Geo.  III.  c.  48), 
that  no  insurance  may  lawfully  be  made  which  is  not  in  the  nature 
of  an  indemnity  for  the  loss  of  an  interest.  No  man  may  insure 
against  the  loss  of  anything  or  the  death  of  any  person  in  which 
or  in  whom  he  has  not  an  interest  (g),  nor  for  more  than  the  value 
of  that  interest  (r),  nor  recover  on  such  insurance  more  than  the 
interest  which  he  hns  (s).  Although  the  words  of  the  statute  seem 
intended  to  restrict  insurance  to  indemnity,  it  has  been  decided  that 
life  insurance  is  not  a  contract  of  indemnity. 

Insurance  on  life  falln  into  two  divisions — insurance  on  own  life, 
and  insurance  on  other's  life.  The  two  classes  would  seem,  in  theory 
at  least,  to  be  governed  by  different  principles.  To  take,  first,  in- 
surance on  another's  life:  Creditors^  policies. — A  creditor  insures  his 
debtor's  life  as  a  means  of  securing  himself  against  the  chance  of 
the  debtor's  dying  without  paying  liim,  i. «.,  as  a  collateral  security 
for  the  debt  (<),  like  a  mortgagee's  fire  policy.  In  other  words,  he 
obtains  a  contract  of  indemnitv  against  the  loss  of  his  debt  by  the 
death  of  the  debtor  before  it  has  been  paid.  In  such  a  case  the 
debt  is  not  a  mere  excuse  for  the  policv ;  but  the  securing  of  the 
debt  or  indemnification  against  its  possible  loss  is  the  reason  for  the 
insurance  being  effected. 

livSitrahle  interest  in  life. — Before  the  Gambling  Act,  Lord  Hard- 
wicke  (u)  held  the  law  to  be  that  only  an  interest  at  the  time 
of  insurance  and  of  the  happening  of  the  event  insured  against 
would  bufllicc,  i.  e.,  that  the  assured  must  have  had  something  to 
lose  when  the  risk  was  insured  against  and  have  lost  some- 
thing by  its  occurrence.  And  to  an  *ordinary  reader  of  the  [*14] 
A(  t  this  )>rinciiile  would  seem  to  be  there  affirmed. 

Li le  policies  do  not  usually  state  the  reasons  for  which  they  were 
efTt  cteu,  nor  the  exact  nature  of  the  interest  on  which  they  ar«> 
based.  Nor  do  insurers  usually  raise  the  question  of  interest,  un- 
less they  have  soniu  other  grounds  for  disputing  liability,  and,  in 
the  absence  of  any  FUspicion  of  fraud,  they  are  glad  to  insure  a 
good  life.  But  the  practice  of  insurers  is  no  more  a  criterion  as  to 
the  policy  or  requirements  of  the  law,  than  is  the  practice  of  pay- 


i; 


(o)  Goodman  v.  JIarvej/,  4  A .  &  E,  870.  870. 

\p)  (iove  V.  Farmern^  Co,.  48  New  lianipshiro  48.     IIitckinH  v.  PeopWa  In- 
ntranvc  Co.,  31  N.  H  288,  248. 
(g)  8.  1.  (r)  S.  1.  («)  8.  8. 

(f)  Stavkpok  V.  Simornis,  2  Park  Ins.  032  (8th  rd.). 
(u)  Haddkra  Co.  v.  Badcock,  2  Atk  654,  1  Wilsou  10. 


♦  16 


THE  LAWS  OP  INSURANCE. 


i  \i. 


ing  debts  of  honour  a  proof  that  such  debts  could  be  sued  on 
Similar  reasons  guide  in  both  cases.    The  law  cannot  stop  people 
from  paying  whf  t  they  are  under  no  liabi  it-y  to  pay,  but  a  court  of 
law  would  be  entitled  to  demand  proof  of  mterest  m  an  msurance 
policy,  notwithstanding  waiver  by  the  insurers  of  such  proot. 

I8  'life  imurame  indemnity  f—H  contemporama  exposUwweie^  ap- 
plied  to  the  Gambling  Act,  there  is  little  or  no  doubt  that  the  views 
bf  Lords  Mansfield  and  Eilenborough,  two  of  our  greatest. mercan- 
tile lawyers,  who  understood  fully  the  state  of  law,  custom,  and 
circumstances  to  meet  which  it  was  framed,  would  prevail  on  tins 
subject.  They  both  undoubtedly  considered  that  insurance  aur 
autre  vie  was  a  contract  of  indemnity;  and  in  accordance  with  this 
view  it  was  decided,  in  Godsal  v.  Boldero,  9  east  72,  that  a  creditor 
of  Mr.  Pitt,  who  had  been  paid  by  his  executors,  could  not  recover 
on  his  insurance  on  Mr.  Pitt's  life.  , 

This  view  was  long  held  correct,  but  was  overruled  in  two  cases 
which  now  control  the  law  as  to  life  insurance— Z)o%  v.  7he  India 
and  London  Lijfe  C&mpany  (x)  and  Law  v.  London  Indisputable  Com- 
pany (y). 
[*  15  ]  WcUby  V.  India  and  Londm  Life  Co.  discussed.— The  first 
of  these  decisions  is  based  (1)  on  a  misinterpretation  of  the 
Gambling  Act,  by  the  3d  section  of  which  (z)  it  is  provided  that 
no  greater  sum  shall  he  recovered  or  received  from  the  insurer 
than  the  amount  or  value  of  the  interest  of  the  assured  in  the  life 
or  event.  In  fire  insurance,  which  is  under  the  same  statute,  a 
man  must  have  interest  nt  the  time  of  insurance  and  of  loss.  But 
in  life  insurance  the  words  are  construed  in  a  different  sense  alto- 
gether. But  it  would  seem  to  be  clear  thatthe  same  words  in  the 
same  statute  are  not  capable  of  two  contrary  constructions. 

(2)  On  a  confusion  between  a  man's  interest  in  his  own  and 
another's  life.  Admitting  that  a  man  cannot  bo  indemnified  for 
the  loss  of  his  own  life,  a  creditor  certainly  can  be  so  for  the  death 
of  his  debtor  insolvent,  and  that  is  what  he  insures  for.  Unless 
he  was  owed  the  debt  he  could  not  insure  the  debtor,  and  usually 
insurance  of  the  debtor  is  the  last  method  a  man  would  adopt  for 
recovering  his  debt. 

(3)  On  a  mistaken  view  as  to  the  nature  of  a  premium.  It  is 
what  a  man  will  pay  to  protect  himself  from  a  probably  greater 
loss.  A  man  has  no  insurable  interest  in  his  premiums,  and  by 
law  cannot  insure  them.  He  has  no  more  interest  in  them  than 
in  his  lust  year's  butcher's  bill.  He  has  had  in  each  case  the 
equivalent,  for  by  payment  of  the  premium  he  bus  bought  immu- 
nitv  from  the  risk  he  wishes  to  co.ver  for  the  period  for  which  he 
seeks  insurance. 

(4)  On  a  petitio  principii.    Both  cases  consider  that 


ilfe  insur- 


(«)  24  L.  J.  C.  P.  2,  15  C.  B.  866,  18  Jur  1024,  24  L.  T.  182,  a  W   H.  11«. 
{}i)  24  L.  J.  Ch.  196,  1  K.  &  J.  228,  1  Jur   N.  S.  170,  8  W.  K.  165 


L.  T.  208 
(«)  Puat,  p.  87 

40 


24 


NATURE  OP  CONTRACT. 


*17 


ance  cannot  be  a  contract  of  indemnity,  because  the  sum  is  cer- 
tain, and  all  will  be  payable ;  but  the  very  point  to  be  decided  is, 
Should  the  whole  insurance  money  be  payable  at  all  events,  or 
only  so  much  thereof  as  compensates  for  the  loss. 

*Oreditora'  policies. — In  fire  insurance  the  amount  stated  in  [*  16] 
the  policy  limits  the  liability  of  the  insurer,  but  does  not 
bind  him  to  pay  the  whole  sum  on  the  happening  of  a  fire,  without 
any  rights  over  the  property  insured ;  but  if  the  view  taken  in  the 
two  cases  under  consideration  be  right,  a  man  who  is  owed  a 
debt  may  make  thereof  an  excuse  for  a  speculation  in  the  life  of 
his  debtor  (a),  for  if  the  ordinary  rules  of  insurance  do  not  api)ly 
there  seems  no  reason  why  he  should  not  "  make  an  excuse  ot  the 
statute  "  and  take  out  a  dozen  policies  each  for  the  amount  of  his 
debt,  and  claim  that,  all  being  several  contracts,  no  evidence  can 
be  adduced  to  show  in  any  one  case  that  he  has  over-insured  his 
interest,  since  contribution  is  out  of  place  unless  the  contract  be 
one  of  indemnity.  But  the  courts  nave  shrunk  from  this  conse- 
quence of  these  two  decisions  (6).  The  Liverpool  poisoning  case 
is  a  striking  commentary  on  the  possible  abuse  of  the  system  of 
issuing  creditors'  policies.  A  woman  having  lent  small  sums  of 
money,  then  insured  the  lives  of  her  debtors  for  an  amount  ex- 
ceeding the  loans,  and  afterwards  poisoned  them  to  obtain  the  in- 
surance-money (c). 

Where  such  policies  are  kept  up  at  the  debtor's  expense,  they 
are  a  security  given  by  him,  and  as  such  not  open  to  objection ; 
but  where  the  creditor  at  his  own  expense  insures  the  debtor,  it  is 
more  economical  for  the  creditor  tnat  the  debtor  should  die 
quickly,  since  it  enables  him  to  get  his  debt  paid  at  less  cost.  It 
is,  indeed,  clear  that  insurance  by  a  creditor  is  open  to  very  serious 
objections  as  it  now  stands,  for,  instead  of  having  something  to 
lose  by  the  death  of  his  debtor,  he  may  actually  find  himself  in 

Socket  thereby.    Unlike  a  mortgagee,  he  has  no  security  for 
is  debt,  and  indeed  insures  to  make  up  *for  the  want  of[*17] 
such  security,  not  to  find  a  means  of  preserving  the  security 
which  ho  has ;  and  insurance  enables  him  either  to  get  both  his 
debt  and  his  insurance  money,  or  to  let  off'  his  debtor  at  the  ex- 
pense of  hiij  insurers. 

Provision  of  Canadian  Civil  Code  as  to  creditors^  policies. — In  the 
Canadian  Civil  Code  of  Lower  Canada,'  which  as  to  insurance  al- 
most wholly  corresponds  witli  English  law,  and  is  a  good  summary 
thereof,  the  objections  to  creditors  and  similar  policies  are  met  by 
article  2692,  which  is  as  follows :  "  The  measure  of  the  interest  in- 
sured in  a  life  policy  is  the  sum  fixed  in  the  policy,  except  in  the 
oases  of  insurance  by  creditors,  or  in  other  like  cases,  in  which  the 


(o)  Soo  Warnock  v.  Davia,  104  U.  S.  (14  Otto)  775,  and  cases  thoru  citod. 

lb)  Jlehdcav.  Went. 'A  B.   *  " '    -^ ^ 

W.  R  42iJ,  0  .Tur.  N.  8.  747. 


(6j  JMdm  V.  Went,  a  B.  A  S,  570,  32  L.  J.  Q.  B.  85,  7  L.  T.  N.  8.  454,  11 


(c)  Heg.  V.  Flannagan,  15  Cox  Cr.  Ca  411. 


41 


♦18 


THE  LAWS  OF  INSURANCE. 


I! 


In  these 


inte^e8^  is  susceptible  of  exact  pecuniary  measurement, 
case^  llie  sum  fixed  is  reduced  to  the  actual  mterest.  ^ 

Own  life  policies  and  indemnity.— X9  to  policies  on  a  man  s  own 
life,  different  considerations  arise,  for  no  man  can  be  indemnihed 
for  the  loss  of  his  own  life.  Such  policies  are  usually  eflFected  as  a 
provision  for  relatives  or  creditors. 

Although  an  insurance  by  a  man  on  his  own  life  was  at  tirst  {d) 
held  to  be  a  contract  of  indemnity,  it  has  since  been  settled  not  to 
be  so  («),  but  to  be  a  contract  by  the  insurer  to  pay  a  certain  sum 
on  the  happening  of  a  given  event— usually  the  death  of  the  as- 
sured, or  his  attaining  a  certain  age— and  the  sum  will  not  vary 
with  reference  to  the  greatness  or  smallness  of  the  loss  to  the  family 
of  the  assured. 

Life  policy.— By  a  policy  of  life  assurance,  the  assurer  agrees  to 
pay  the  assured  a  certain  sum  of  money  on  the  death  of  a  person 
therein  named,  and  in  consideration  thereof  the  assured  pays  the 
assurer  a  certain  smaller  sum  immediately  on  effecting  the 
[*18]  insurance,  or  agrees  to  pay  *the  assurer  a  premium  or  an- 
nual sum  until  such  death  occurs;  orlf  the  whole  period 
of  life  be  not  insured,  then  until  the  expiration  of  the  term  during 
which  the  insurance  is  to  continue. 

In  the  case  of  DaWy  v.  India  and  London  Life  Assurance  Go.  (e), 
a  life  assurance  is  thus  defined: — "The  contract  commonly  called 
life  assurance  is,  when  properly  considered,  a  mere  contract  to  pay 
a  certain  sum  of  money  on  the  death  of  a  person  in  consideration 
of  the  due  payment  of  a  certain  annuity  for  his  life,  the  amount 
of  the  annuity  being  calculated,  in  the  first  instance,  according  to 
the  probable  duration  of  his  life,  and  when  once  fixed  it  is  con- 
stant and  invariable.  The  stipulated  amount  of  the  annuity  is  to 
be  uniformly  paid  on  one  side,  and  the  sum  to  be  paid  in  the  event 
of  death  is  always  (except  where  bonuses  have  been  given  by  pros- 
perous offices)  the  same  on  the  other."  Definition  oj  life  insurance 
per  Jesself  M.  R. — The  definition  given  by  Sir  Geo.  Jessel  of  the 
contract  of  life  assurance  is  "  a  purchase  of  a  revisionary  sum  in 
consideration  of  a  present  payment  of  money,  or,  as  U  generally 
the  case,  on  the  payment  of  an  annuity  during  the  life  of  the  per- 
son insuring  "  Q ). 

Life  insurance  converse  of  an  annuity. — A  policy  of  Jifo  insurance 
is  not  an  insurance  from  y6ar  to  year,  but  the  premiums  consti- 
tute an  annuity,  the  whole  of  which  is  the  consideration  for  the 
entire  assurance  for  life.  A  life  policy  is  the  converse  of  an  an- 
nuity. A  man  elects  to  pay  the  insurers  an  annuity  on  their  guhran- 
teeing  his  representatives  a  lumj)  sum  on  his  death.  In  the  other 
case  a  lump  sum  is  paid  by  him,  he  to  receive  an  annuity  for  his  life. 


Oothal  V.  Boldero,  9  East  72 


id)  G    

(e)  DcUbjf  V.  India  and  London  Life  Co.,  supra,  p 

Ch.  D.  675.  086.  46  L  J.  Ch.  817.  J'S  L.  T.  N.  8.  458,  26  W/iv^i! 


676,  086.  46  L  J.  Ch.  817,  ?6  L 
«)  15  C.  B.  887.  24  L.  J.  C.  P.  2,  24  L 
)  Dryer  v.  JItoreland,  8  Ch  D.  686. 

42 


in.     Fruer  v.  Moreland, 


T.  182,  8  W.'R.  110,i8Jur. 
See  lut  page. 


lOM 


Fund 

(h) 

<*)- 
404,  2! 

(k) 


NATURE  OF  CONTRACT. 


*20 


In  either  case  there  is  no  relation  between  the  annual  premium 
and  the  risk  of  assurance  lor  the  year  in  wliich  it  is  paid. 

♦Indeed,  the  premium  for  single-year  insurance  is  lower  [*19] 
than  the  year's  premium  on  a  whole  life  policy,  there  being 
no  certainty  of  death  within  the'  period  and  no  optit;n  t( 


to  con- 


no  certauity 
tinuo  (g). 

Insurance  against  a/iddent  and  indemnity. — An  agrtenient  to  com- 
pensate a  man  for  injuries  by  accident  might  seem  to  bo  ii  contract 
of  indemnity,  but  it  must  be  remembered  that  in  this  case,  as  in 
that  of  an  insurance  on  a  man's  own  life,  the  value  of  tho  peril  in- 
sured against  cannot  be  appraised  in  money,  and  therefore  the  in- 
sured cannot  really  be  indemnified;  for  although  the  evil  lesults 
of  bodily  injury  can  often  be  alleviated  by  what  money  will  pro- 
cure, mere  money  cannot  allay  or  remove  the  suffering,  and  there- 
fore cannot  really  constitute  an  indemnity.  Moreover,  the  i)ayment 
contracted  by  the  insurers  to  be  made  in  case  of  accident  is,  under 
present  i)ructice,  a  certain  fixed,  invariable  sum.  No  gradual  gcale 
of  compensation  for  different  accidents  could  bo  satisfactorily 
framed,  for  the  reason  already  mentioned,  that  bodily  pain  and 
suffering  do  not  admit  of  a  preci^^o  valuation.  Where  tliere  is  in- 
demnity by  the  insurer,  there  is  subrogation  of  him  to  the  rights 
of  the  assured:  but  by  tho  Railway  Passengers'  Assuriincc  Com- 
pany's second  Act,  tho  right  of  subrogation  in  case  of  accident  in- 
surance is  negatived  (h). 

Insurance  not  pleadahle  in  action  for  negligence, — A  tortfe-isor,  who 
may  have  caused  an  accident,  not  resulting  in  death,  cannot  plead 
an  insurance  against  accident  in  mitigation  of  damages  Ci),  the  re- 
sult of  which  is  that  a  man  may  sometimes  make  a  considerable 
profit  out  of  an  accident  by  judicious  insurance,  since  he  is  not 
accountable  to  his  insurers  for  any  surplus  over  and  above  full 
compensation. 

Except  where  death  ensues. — But  where  an  insured  man  is 
killed  by  an  accident,  *the  tortfeasors  get  tho  benefit  of  tho  [*20] 
insurance;  for  in  an  action  under  Lorcf  Campbell's  Acts  the 
damages  payable  in  respect  of  a  death  caused  by  a  tortious  act  are 
reduced  by  reference  to  the  {)rudence  of  the  deceased  in  insuring 
his  life,  and  the  tortfeasor  is  allowed  to  plead  such  insurance  in 
mitigation  of  damages  (Jc).  But  if  the  man  had  lost  all  his  limbs 
and  senses,  and  retained  his  life,  the  tortfeasor  could  not  have 
pleaded  an  accident  uolicjr  in  such  mitigation ;  since  tho  injury  to 
the  man  himself  ana  the  injury  to  his  family  or  representatives  is 
different  in  kind. 


[g)  Rose  v.  Medical,  <fcc.,  11  C.  S.  C  (2iid  Hcries)  151.  Scottish  Widows' 
Fiind  V.  Buist,  »  C.  8.  C.  (4th  Bories)  1078. 

(h)  27  and  28  Vict,  c  155. 

(t)  liradhurn  v.  G.  W,  J{ ,  L.  U.  10  Ex.  1,  44  L.  J.  Ex.  9,  81  L.  T.  N.  8. 
404,  28  W.  R.  48. 

(k)  Hicks  V.  Newport  RaUway,  4  B.  &  9.  408  note. 

48 


♦21 


THE  LAWS  OF  INSURANCE. 


[*21] 


THE  CONTRACT  OF  INSURANCE. 

The  term  policy.-The  usual  instrument  containing  a  contract  of 
insurance  ircalled  a  policy,  a  term  borrowed  from  the  Italian  mer- 
chants  who   introduced   tlie    practice   of  msurance   into   this 

^^nladio  irmre  verbd  «  r-n  law.-M  common  law  a  verbal 
promise  for  a  valuable  oc  6:.a...ion  to  issue  a  policy  of  insurance 
IS  valid.  "  Such  promise  need  not  be  in  wnting,  any  more  than  a 
promise  to  execute  anu  d' liver  a  bond  or  a  bill  of  exchange  or  a 
negotiable  note  "  (m) ;  and  iiif  u  anc  ..tracts  other  than  guaran- 
tee insurances  are  not  within  the  Statutt  of  Frauds;  and  the  con- 
tract, being  consensual,  depends  for  its  validity  on  agreement  be- 
tween the  parties  as  to  the  risk  and  premium,  and  not  on  the  par- 
ticular evidence  used  to  prove  the  same  (n). 

*  Vhether  policy  necmary  by  ktatute.— The  Gambling  Act  (14 
Geo.  Ill  c.  48),s.  2,  evidently  contemplates  that  insurance  will 
be  made  by  policy,  but  does  not  enact  that  it  shall  be  so  made,  but 
only  that  all  policies  shall  contain  the  name  of  the  person  inter- 
ested therein.  No  subsequent  statute  now  in  force  enacts  this,  un- 
less it  be  the  Stamp  Act  (o),  whereby  it  is  enacted  that  the  insurers 
are  iDound,  under  penalty,  to  issue  a  stamped  policy  within  a  cer- 
tain time  after  they  have  accepted  a  premium.  But  this  enactment 
obviously  aims  only  at  protecting  the  revenue,  and  it  is  impossible 
to  suppose  that  it  was  thereby  intended  to  punish  the  assured  for 
a  breach  by  the  insurer  of  his  statutory  dutv,  or  that  it  was  in- 
tended to  interfere  with  his  right  to  demand  a  stamped  policy, 
which  would  be  evidence  of  the  contract  of  insurance  agreed  be- 
tween the  parties. 

Policy  necessary  by  constUution  of  company. — Though,  as  has  been 
seen,  no  enactment  in  express  terms  makes  it  necessary  to  have  a 
contract  of  insurance  in  writing,  the  special  constitution  of  each 
company  usually  provides  the  mode  in  which  the  company  is  to  be 
bound, and  policies  must  be  issued  in  accordance  with  tnoprovit^ions 
of  such  constitution  before  the  assured  c  msue  on  the  insurance.  But 
this  rule  will  not  prevent  theCourts  from  making  a  company  issue  a 


{I)  Tho  Itiilian  polizza  is  derived  from  To^»"rrw;(;oi',  pnlyptychnm,  a  tal)let  of 
several  folds  (as  distinguished  from  diptyeii,  triptych,  &c.),  used  in  lato  Latin  for 
an  account  or  uiomorauduiu  book.  See  Fucciolati,  s.  v.  "  polyptychuni " — Littiv, 
a,  V.  "  police." 

(m)  Kains  v.  Knightly.  Skinner  55  (a.  n.  1G81).  Cummrrcial  Mutual  v. 
Union  Mutual,  19  Howard  (U.  8.)  018.  Newman  v.  BeUten,  70  L.  T.  Journol. 
228. 

(n)  Bishop  v.  Clay  Insuranre  Co..  49  Connecticut  107.     Biahup  of  Chatham 
V.  Western,  <kc  ,  Co,  1  Pugs.  &  Tr.  (New  Bruns.)  242. 
(o)  88&84  Vict.  c.  97,8.20(1). 

44 


16 
H. 


THE  CONTRACT. 


*23 


policy  when  there  is  clear  proof  of  an  agreement  to  insure.  In 
n.arine  insurances,  which  by  the  Act  30  Vict.  c.  23,  must  be  by 
policy,  it  is  especially  common  to  issue  after  loss  a  stamped  pjolicy 
m  accordance  with  the  slip,  which  is  held  binding  in  honour,  if  not 
in  law,  as  a  real  contract  (p). 

Parol  evidence  to  show  object  of  policy.— -It  may,  it  seems,  be  shown 
by  parol  evidence  that  a  policy  was  intended  by  an  intestate 
to  be  for  the  benefit  *of  his  wife,  under  the  Married  Women's  [*22  ] 
Property  Act,  1870,  s.  10;  or  the  Married  Women's  Property 
Act,  1882,  s.  11  (q).  It  must  be  observed  that  the  insurers  in  this 
case  did  not  dispute,  though  they  had  mistaken,  the  intestate's  in- 
tention. 

Action  on  policy  not  delivered. — If  a  policy  has  been  duly  signed 
and  countersigned,  and  is  ready  to  be,  although  it  has  not  been  in 
fact,  delivered  by  the  insurers,  it  will  be  deemed  to  be  so  far  de- 
livered that  the  assured  cannot  sue  in  equity  for  the  loss,  on  the 
ground  of  the  policy  not  being  a  perfected  one,  and  therefore  not 
sufficient  to  support  an  action  at  law  (r).  And  where  a  policy  pur- 
ported to  be  signed,  sealed,  and  delivered,  and  had  in  fact  been 
signed  and  sealed,  but  had  never  left  the  office  of  the  company, 
the  House  of  Lords  held  that  there  was  a  delivery  (s). 

Insurance  mthovi  policy. — It  has  been  held  in  Scotland  that  there 
may  be  insurance  without  delivery  of  a  policy  if  the  terms  are 
agreed  and  if  the  premium  has  been  paid  (0,  Policy  mmt  conform 
to  contract. — And  if  the  policy  when  issued  does  not  conform  to  the 
true  intent  of  the  parties  at  the  time  when  the  insurance  is  agreed 
upon,  it  m.ay  be  rectified  or  the  true  contract  sued  upon  (u).  If  a 
parol  contract  be  proved,  it  will  not  be  held  to  have  merged  in  a 
policy  which  is  not  in  conformity  with  the  parol  agreement  (x), 
and  in  such  case  the  policy  may  be  rectified  so  as  to  accord  with 
the  parol  contract  (y).  Indeed,  on  most  policies  issued  there 
is  a  notice  to  *return  them  for  correction  if  they  are  not  ac-  [*23  ] 
curately  set  out. 

(p)  See  Mead  v.  Davidton,  8  A.  &  E.  803.  Lishmonv.  Northern  Marine  Co  , 
L.  R.  10  C.  P.  179,  44  L.  J.  C.  P.  185,  82  L.  T.  N.  S.  170,  23  W.  R.  733.  Morocco 
Land  Co.  v.  Fn/,  11  Jur.  N.  S.  70,  11  L.  T.  N.  S.  618,  13  W.  R.  310.  Fuher  v. 
Liverpool  Marine  Co  ,  L.  R.  8  Q.  B.  469 

{q)  Newman  v.  Belaten,  Sol.  Jour.  23  Feb.  1884,  p.  801. 

(r)  M^Farlane  v.  Andes  Imurance  Co.,  20  Grant  (U.  C.)  486. 

(s)  Xenos  V.  Wickham,  L.  R.  3  H.  L.  206,  86  L.  J.  Ex.  818, 16  L.  T.  N.  S.  800, 
16  W.  R.  88.      ■  -  -  -  - 


Potter  V  Jiankin,  6 
C.  (Ist  series)  510,  1826.     liotisiter  v. 


Jones  V.  Provincial,  616  U.  C.  (Q.  B.)  477. 
H.  L.  C.  114. 

(t)  Christie  v.  North  liritish,  3  C.  S. 
Tafalger  Life,  27  Beav.  877. 

(m)  AWion  Co  v.  Mills,  8  Wils.  &  Shaw  (Scotch)  218,  227,  (H.  L.).   See  Wi/lia 
Tivies  Fire,  22  C.  S.  C.  (2nd  series)  1498. 

(»)  Reli^  Fire  Co.  v.  Shaw,  94  U.  8.  (4  Otto)  574.     Nmoman  v.  Belsten, 
supra. 

(y)  Motteiue  v.  London  Assurance,  1  Atk.  646.     CoUttt  v.  Morrison,  21  L.  J 
Ch.  878,  U  Ha.  162. 

4ft 


*24 


THE  LAWS  OP  INSURANCE. 


11"  il 


And  an  offer  to  insure  on  terms  cannot  be  revoked  after  leceipt 

or  acceptance.  „    .         ^,         ,. 

Issue  of  policy  after  toss.— Insurers  usually  issue  the  policy  even 
if  the  loss  intervenes  between  the  acceptance  and  the  usual  time 
for  issuo  (2).  But  it  would  appear  that  if  the  risk  is  changed  be- 
fore the  premium  is  paid  they  will  not  be  liable  (a). 

Tho  person  to  sue  on  the  policy  is  the  person  in  whom  the  in- 
terest appears.  .  , 

Ambiguom  covenarU  presumed  to  be  with  person  interested. — There- 
fore where  11  policy  was  by  deed  jioll  and  tlie  covenant  to  pay  was 
ambij^uous  as  to  the  person  with  whom  it  was  made,  it  was  con- 
strued as  beinj?  with  tho  person  in  whom  the  iiitertst  appeared, 
and  he  was  allowed  to  sue  in  his  own  name  though  ho  had  not 
himself  effected  the  ijolicv  (6). 

Remedy  for  unperformed  agreement  to  grant  policy.— The  proper 
mode  of  obtaining  tho  benefit  of  an  ajjreement  to  insure  would 
seem  to  be  either  to  sue  for  u  proper  policy,  or  claim  damages  for 
breach  of  contract  to  grant  one,  or  to  seek  relief  on  the  fooling  of  a 
proper  policy  having  been  issued.  Tho  latter  course  has  been 
adopted  in  Ciinada  and  tho  United  States  (c). 

Company  can't  plead  want  of  seal. — And  in  Canada  the  Supreme 
Court  liavu  held  that  an  insurance  company  could  be  restmined 
from  pie  ulin;;  want  of  a  seal  to  n  policy  (d).  This  no  doubt  did 
substantial  justice,  and  attained  the  end  which  might  have  been 
reached  by  h  Huit  in  equity  fur  a  proper  ])olic^;  but  the  law  laid 
down  is  at  least  doubtlul,  and  the  members  ot  the  Court  were  not 

unanimous. 
[*24]  '^Accepting  policy  wi^out  noticinff  mistake. — It  is  usual  to 
print  upon  a  policy  a  notice  requiring  the  assured  to  inspect 
it  immediately  on  receipt  and  return  it  for  correction.  But  even  if 
thero  bo  no  such  notice,  if  a  man  does  not  read  his  policy  ho  lius 
only  Ijiniself  to  blame,  and,  by  not  returning  it  if  wrong  he  may 
waive  till  right  to  complain  subsequently  of  any  mistakes  con- 
tained ill  it  (d). 

A  pi'licy  m;iy  of  course  be  altered  by  consent  of  parties,  whether 
the  ulurution  consists  in  correcting  an  error  or  an  omission,  or  iii 
variation  of  the  terms  of  tho  contract. 
Altcrntloii.  ( f  jiolicy —Bui  a  m!iterinl  alteration  of  the  policy  by 

(z)  Mildred  v.  Maspons.  8  App.  Cns.  874. 

(a)  Caaniiiffv.  Farquhar,  1(J  Q.  U  D.  727,  58  L.  J  Q  B.  225,  34  W.  R  428. 

(6)  Moss  V.  Legal  and  General  Life,  1  Victorin  Law  315.  .Sunderland  Ma- 
7n^m  4 ''«'•"%  ^^  Q- J'  025.  Hodsm  V.  Observer  Life  Lwirance,  8  E.  &  B. 
40,  ao  L   J,  Q^  D   803,  29  L.  T    0   S   278,  3  Jur  N.  S.  112%  «  \v.  R.  712. 

w!  R*882^"      '  ^'      "^^'  ^^    *  ^'  ^-  ^  ^•'^'  ^*^  ^-  ^-  ^'  ^-  "'^♦>'  ^^ 

L.¥  R 'So'i;  nT  R^os?!  °""'  ^^'  ^'^  ^^-   ^'^''''  "'  ^"''''^''«"  ^" '  21 

ii)  k""J\"^  Welnsuranre  Co.  v.  Wnght,  6  Canada  (S.  C  )  466. 
ttif  81  VV'  Ta87.^      •  ^^  ^'  ^  ^'  "^'  ^'^  ^-  ^'  Q-  ^-  ^'^'  ^8  L.  T.  N.  S. 

46 


THE  CONTRACT. 


*25 


the  assured  without  the  consent  of  the  insurer  will  he  treated  as  a 
fraud,  and  avoid  the  contract  (e). 

Policy  not  according  to  agreement. — When  on  a  proposal  and 
agreement  for  nn  insurance  policy  is  drawn  up  by  the  insurance 
office  in  a  form  differing  from  the  terms  of  the  agreement,  and  va- 
ries the  right  of  the  assured,  the  Court  will  look  at  the  agreement 
and  not  at  the  policy  (f).  Where  the  mistake  cannot  bo  rectified, 
it  seems  that  the  contract  will  be  rescinded  and  a  return  of  pre- 
miums ordered  (g). 

When  a  mistake  loill  not  be  rectified. — Where  a  policy  is  not  in  ac- 
cordance with  the  real  terms  of  the  agreement,  but  such  terms 
though  agreed  on  with  the  agent  by  the  person  seeking  insurance 
have  not  been  by  him,  or  at  all,  communicated  to  the  insurer,  or 
if  communicated  not  adopted,  rectification  will  not  be  ordered, 
but  (he  policv  will  bo  declared  not  binding  on  the  insurers, 
and  they  will  have  to  *repay  the  premiums  paid,  as  money  [*  25  ] 
paid  to  them  under  a  mistake  (^). 

Subject  to  tho  power  of  proving  that  the  policy  does  not  embody 
the  real  terms  agreed  upon,  no  material  terms  may  be  imported 
into  a  written  contract  of  insurance  which  the  parties  have  not 
thought  fit  to  insert  (»'). 

Loss  of  policy.  Company  indemnified  by  judgment. — If  a  policy  of 
assurance  be  lost  or  destroyed,  an  siction  will  nevertheless  lie  to  re- 
cover the  insurance  money,  and  tho  order  or  judgment  of  the 
Court  directing  the  office  to  pay  will  be  a  sufficient  indemnity 
against  subsequent  claims  (A;). 

Premium — preliminary  payment. — Payment  of  a  premium  de- 
manded on  application  for  u  policy  does  not  give  the  applicnnt  an 
absolute  title  to  a  policy.  But  if  the  risk  is  rejected,  or  a  higher 
premium  demanded  and  refused,  the  insurer  muHt  offer  to  return 
the  premium.  Still,  the  mere  fact  that  tho  agent  retains  tho  pre- 
mium by  arrangement  with  tho  applicant,  pending  an  effort  to  get 
the  insurers  to  reconsider  their  decision,  will  not  amount  to  a  fail- 
ure to  repay  (/). 

Interim  notes. — The  interim  protection  notes  given  by  fire  insur- 

(e)  Liverpool.  London  and  Globe  v,  Wyhl,  21  Grant  (U.  C, )  458,  2:1  Grant 
442,  1  Canado  d04.    Hill  v.  Patten,  8  East  ;f73.     French  v.  Patten,  1  Camp  72, 
180.     Farlie  v.  Christie,  7  Taunt  416.     Langhorn  v.  Cologan,  4  Taunt  330 
Saiuhrson  v  S/jmonds,  1  B  &  B.  426.    Matiter  v.  Miller,  4  T.  R  320. 

if)  Collett  V.  Moi-rison,  9  Hare  1C2.  21  L.  J  Ch.  878  Henkcl  v.  Rnyal  Ex- 
change, 1  Ves.  Sr.  317.  Parsons  v.  Bigmld,  16  L.  J  Ch.  879,  13  Sim.  518,  7 
Jur.  501 .  Ball  v.  Storie,  1  S.  &  S.  210.  But  Bee  JUKenzie  v.  Coulaon,  8  Eq. 
868 

(ff)  Fovcler  v.  Scottish  Equitable,  28  L.  J.  Ch.  225,  82  L.  T.  119,  4  Jur. 
N.S.  1169.  7  W  R.  5 

(h)  Fowler  V.  Scottish  Equitable,  supra. 

(t)  Dudgeon  v.  Pembroke,  2  App.  Cas  ?84,  298,  40  L.  J.  Q.  B  409,  80  L  T. 
N.  S.  882,  25  W.  R.  499.     Gibson  v.  Small,  4  II.  L  C.  853. 

{k)  Crovkatt  v  Ford,  26  L.  J.  Ch  652,  2  Jur.  N.  S  480,  4  W.  R.  426.  J^no^ 
land  V.  Tredegar,  L.  R  1  Eq.  844,  86  L.  J.  Ch.  886,  85  Beav.  256. 

{I)  Ottcrbein  v.  Iowa  State  Ituuranee  Co,,  67  Iowa  274. 

47 


*27 


THE  LAWS  OF  INSURANCE. 


ance  companies  bear  an  analogy  to  the  slips  commonly  used  in 
cases  of  marine  insurances  preliminary  to  the  issuing  of  i)olicie8 
(m).  The  slip  contains  the  heads  of  the  contract,  and  is  itselt  a 
contract  of  insurance,  but  not  a  policy,  and,  in  virtue  of  certain  en- 
actments, not  enforcable  at  law  or  in  equity,  but  available  in  evi- 
dence where  material. 
[*26]  ^IrUerim  notes.— The  interim  note  contains  a  proposal  to 
effect  an  insurance  on  the  com  panics' usual  terms  and  condi- 
tions, and  the  interim  insurance  is  made  subject  to  those  terms  and 
conditions,  and  they  ought  to  be  read  into  the  interim  note  so  far  as 
they  are  lawful;  and  the  note  forms  a  contract  of  insurance  during 
the  interval  between  the  proposal  and  the  final  acceptance  or  re- 
fusal of  the  insurers  (n). 

Interim  receipts. — Interim  receipts  for  the  whole  or  part  of  the 
premium,  and  insuring  the  applicant  for  a  month  or  until  notice 
of  rejection,  are  common  in  England,  but  have  rarely  been  subjects 
of  action  (o). 

An  insurance  company  are  clearly  entitled  to  make  the  insur- 
ance under  an  interim  receipt  subject  to  the  conditions  in  the  usual 
policy  (p).  Reference  thereto  in  the  reci  ipt  will  affect  the  appli- 
cant with  notice  thereof  (9),  provided  that  he  is  permitted  an 
opportunity  of  learning  what  the  conditions  are. 

If  the  interim  receipt  be  for  bo  many  days,  and  the  policy  con- 
tain a  condition  that  the  insurance  may  be  terminated  at  any  time 
within  the  period  originally  contracted  for  on  ten  days'  notice,  and 
the  repayment  of  a  rateable  proportion  of  the  premium  for  the  un- 
expired term,  ten  days'  notice  must  be  given  to  terminate  the 
interim  insurance  and  tender  of  the  unearned  part  of  the  premium 
made  (r).  So  if  a  fire  happens  within  a  period  of  interim  insur- 
ancoj  but  after  notice  that  a  regular  insurance  will  not  be  issued, 
the  insurance  company  are  bound  for  ten  days  after  the  notice 

given  («). 
[*  27]  *But  if  the  insurers  give  no  notice  of  rejection,  and  do 
^  not  issue  a  policy,  it  would  seem  that  they  will  be  taken  to 
have  elected  to  accept  the  proposal,  and  they  will  be  liable  thereon, 
unless,  of  course,  it  is  stated  that  silence  amounts  to  refusal  to  go  on 
with  the  contract.  Where  an  interim  receipt  was  given  on  a  form 
declaring  that  a  policy  would  be  issued  in  sixty  days  if  approved, 
and  the  agent  giving  the  receipt  did  not  report  the  transaction,  the 


A^^^m^x^^L^^'^'^'^!^^  ^1-  "•  ^'•«on»,  7  App  Cas.  96,  126,  51.  L 
45  L.T.  N.  8.  721.    lonidesv.  Pacific,  L.  R. '  -    '  - 

26  L.  T.  N.  8.  788,  21  W.  R,  22. 


J  P.C.  H 
Q    B    100. 


■^W^ift  V.  Piaciftc,  L.  H."7  Q.  B.  517,  4rL.'  J. 

45^?T^"N.'s'^72r"'*^*  ^"'  "^  ^''"""'  ^  ^PP"  ^"'  ®®'  ^^^'  '"'^  ^"  •^-  ^*-  ^-  11» 
(0)  Mackie  v.  EurppeanVo.  21  L  T.N.  S.  102,  17  W.  R.  987. 
h)  AT  Queen  v  Phoenix,  29  U.  C  (C.  P.)  611. 

y}  S^?**^  ^'  ^'i*<*nce  Jiuiml  Fire  Co.,  44  U.  C.  (Q  B.)  M 
(*)  iota.  ' 

48 


(0 

(u) 

(X) 


THE  CONTKACT. 


28 


insurers  are  held  liable  for  his  neglect  and  the  absence  of  the  policy 
— the  receipt  constituting  a  valid  insurance  (t). 

Transaction  amounting  to  re-insurance.  Policy  dated  after  fire.  Rer 
insurance.  ^^ Burnt  or  not  bumt.^' — It  is  rare  for  a  case  to  arise  of  a 
policy  against  fire  on  land,  lost  or  not  lost.  But  in  Giffard  v.  Queen 
Insurance  Company  (w),  the  plaintiff  insured  in  the  London  and 
Liverpool  Company  from  2nd  October  1865  to  2nd  October  1866. 
Before  the  term  expired  he  received  a  notice  from  their  sub  agent 
that  the  insurers  would  renew,  and  accordingly  ho  paid  the  pre- 
mium to  him  on  their  account.  The  general  agent  of  the  company 
declined  to  renew  the  policy,  and  paid  the  premium  to  the  Quet-n 
Insurance  Company  (the  <lefendaiits),  who  issued  a  policv,  dated 
16th  Oct.  1866,  but  insuring  from  2ncl  Oct.  1866  to  2nd  Oct.  1867. 
The  premises  were  destroyed  b>  firo  on  13th  October,  before  the 
policy  was  issued ;  but  the  plaintiff  did  not  know  that  he  was  in- 
sured by  the  defendants  until  he  received  the  policy  from  the  sub- 
agent,  who  also  acted  for  the  defendants.  It  was  held  that  the 
transaction  amounted  to  a  re-insurance,  and  that  the  defendants  in 
effect  insured  the  property,  "  lost  or  not  lost,"  in  other  words,  "burnt 
or  not  burnt,"  from  2nd  Oct.  1866  to  2nd  Oct.  1867. 

Open  policy. — In  certain  busines->jes  in  this  country  it  seems  to  be 
the  practice  to  take  out  an  open  policy  against  all  risks  by  t'ca  and 
lanc^  and  to  provide  that  the  assured  may  declare  thereon 
BO  soon  as  he  learns  that  property  at  *hi3  risk  of  the  class  [*28  ] 
insured  is  in  transit  to  him,  and  whether  such  property  is  at 
the  time  lost  or  not. 

Firms  which  have  to  transmit  valuable  property  or  securities 
through  the  p^ost  thus  insure  them ;  and  even  when  simultaneously 
advised  of  transmission  and  loss,  they  can  still,  under  such  a  policy, 
declare  their  loss,  provided  only  that  they  observe  good  faith  in  tne 
transaction. 

Floating  policy. — Another  class  of  policv  is  that  termed  a  floating 
policy.  The  amount  of  goods  covered  by  such  a  policy  is  ascer- 
tainable at  the  moment  of  loss  only,  and  to  protect  the  insurers," 
such  a  policy  provides  that  the  liability  of  the  insurers  'shall  bo 
only  rateable. 

Thus  if  it  be  on  a  fluctuating  amount  of  goods  in  a  warehouse, 
and  the  amount  there  at  the  date  of  a  Are  exceed  the  amount  of 
insurance,  the  owner  will  bo  his  own  insurer jwo  roAa^  and  will  not 
receive  the  whole  of  the  insurance  money.  This  kind  of  policy  U 
adopted  to  prevent  the  assured  from  making  his  policy  cover  in 
effect  a  liurger  amount  of  goods  than  are  fairly  insurable  at  the  pre- 
mium paid  (x). 

(t)  Patterson  v.  Royal  Insurance  Co.,  14  Grant  (U.  C.)  169. 
(u)  1  Hannay  (New  Bruus.)  432. 
(«)  Vido  i)08t,  cap.  xi. 


A.  PORTER  ON   INSURANCE. 


49 


•89 


THE  LAWS  OF  INSURANCE. 


CONSTRUCTION   OP   POLICY. 

Pdici/asarule  cmstrwd  like  other  instruments.— '' Tho  aame  rule 
of  construction  which  applies  to  all  other  instruments,  applies 
equally  to  a  policy  of  insurance,  viz.,  that  it  is  to  be  construed  ac- 
cording to  its  sense  and  meaning  us  collected,  in  the  first  plac^ 
from  the  terms  usedinit,  which  termaare  themselves  to  be  understood 
in  their  plain,  ordinary,  and  popular  sense,  unless  they  have  gen- 
erally in  respect  to  theBub]ect-matter,as  by  theknownusagoof  trade 
or  the  like,  acquired  a  peculiar  sense  distinct  from  tho  popular 
sense  ot  the  same  words,  or  unless  the  context  evidently 
{;*29]  points  out  that  they  must  in  the  particular  instance,  *and  in 
order  to  effectuate  the  immediate  intention  of  the  parties  to 
that  contract,  bo  under-tood  in  some  other  special  and  peculiar 
sense. 

Difference  between  policies  and  other  instruments.-—^''  Tho  only  differ- 
ence between  policies  as  assurance  and  other  instruments  in  this 
respect  is,  that  the  greater  part  of  the  })rinted  language  of  them, 
being  invariable  and  uniform,  has  acquired  from  use  and  practice 
a  known  and  definate  meaning,  and  that  tho  words  superadded  in 
writing  (subject,  indeed,  always  to  be  governed  in  point  of  con- 
struction by  the  language  and  terms  with  which  they  are  accom- 
panipd)  are  entitled,  nevertheless,  if  there  should  bo  any  reasonable 
doubt  upon  the  sense  and  meaning  of  the  whole,  to  have  n  greater 
effect  attributed  to  them  than  to  the  printed  words,  inasmuch  as 
tho  written  words  are  the  immediate  language  and  terms  selected 
by  the  parties  themselves  for  tho  expression  of  their  meaning,  and 
the  printed  words  are  a  general  formula  adapted  equally  to  their 
case  and  that  of  all  other  contracting  parties  upon  similar  occasions 
and  subjects  "  (y). 

Stridumjus  not  rule  of  construction.^-Lord  Mansfield's  view  of  the 
construction  of  policies  was  that"  It  is  certain  that  in  the  construc- 
tion of  policies  the  strictum.  jus  or  apex  juris  is  not  to  bo  laid  hold 
of;  but  they  are  to  be  construed  largely  for  the  benefit  of  trade  and 
for  the  insured  "  (z). 

Construction  of  policies.— In  the  mercantile  contract  of  insurance 
it  is  always  the  custom  to  express  the  mutual  bargain  in  short  and 
conventional  terms.  The  assured  is  not  meant  to  bo  bound  to  carry 
out  his  adventure  in  exact  conformity  with  tho  words  rigidly  con- 
strued and  confined  to  what  is  absolutely  necessary,  but  tho  gen- 
eral words  of  the  policy  are  intended  to  bo  construed  so  as  to  con- 
form 
turo  ( 


to  tho  usual  and  ordinary  method  of  pursuing  the  adven- 

a).» 


iy)  ^"bertson  v.  French,  4  East  l-SO,  135,  per  Lord  Ellenboroii.»h. 

U)  Felly  V.  Jioyal  Exchange,  1  Burr.  841,  848. 

(a)  Pearson  v.  Commercial  Union,  1  App.  Cas.  507,  per  Lord  Penzance. 

•  J  ohc/  on  a  hotel,  italurniture,  Ac,  excepted,  "goods  held  on  storage."  Held, 
Itat  furniture  stored  to  be  used  in  the  business  of  tho  hotel  was  not  within  the 
•soeption.    Conttnenicil  Ins.  Co.  v.  Fruitt,  65  Texas  125. 

50 


(6) 

S.  205 
S.  12: 
L.J. 

id) 

Mofi 


I 


CONSTRUCTION  OP  POLICY. 


*31 


^LiheralUy  of  construction  not  indiffereMX. — But  liberality  of  [*30] 
construction  can  never  justify  indifference  to  the  real  pur- 
pose of  a  policy,  or  warrant  the  recognition  of  an  obligation  which 
was  not  directly  or  by  reasonable  implication  imposed  oy  its  terms, 
when  those  terms  are  fairly  interpreted  acording  to  their  natural 
and  ordinary  meaning  (6). 

Policy  construed  againd  company. — ^The  terms  of  a  policy  of  life 
assurance,  being  the  language  of  the  company,  must  be  taken  most 
strongly  against  them  (c).  This  view  is  in  accord  with  Anderson 
X.  Fitzgerald,  A  H.  L.  C.  484,  where  Lord  St.  Leonards  says — "It 
[the  policy]  is  of  course  prepared  by  the  company,  and  if,  there- 
fore, there  should  be  any  ambiguity  in  it,  it  must,  according  to  law, 
be  taken  more  strongly  against  the  person  who  prepared  it." 

Thteimeaning  of  a  contract. — And  in  another  recent  Scotch  case 
the  same  view  is  thus  expressed — ^that  is  the  true  meaning  of  my 
contract  which  I  desire  the  other  contracting  party  to  put  upon  it, 
lot  that  which  in  my  own  favour  I  wrap  up  in  general  phrase  (d). 

In  Birdl  v.  Dryer  (e),  however,  it  was  held  that  whether  the  un- 
derwriters are  to  be  considered  the  *'  proferentes  "  (within  the  mean- 
ing of  the  mpxim  "  Verba  fortius  accipiuntur  contra  proferentem") 
with  regard  to  a  condition  in  a  policy  of  insurance  depends  upon 
the  character  and  substance  of  the  condition. 

This  is  the  same  rule  of  construction  as  is  applied  to  guarantees 
(/),  and  generally  to  all  instruments  prepared  by  one  party  and 
tendered  to  the  other  (g). 

''^Courts  look  more  to  the  policy  than  custom. — The  tendency  of  [*31  ] 
judicial  decisions  is  to  pay  more  regard  to  the  policy  and 
less  to  evidence  of  custom.  The  reason  of  this  is  that  policies, 
especially  fire  and  life,  are  drawn  with  more  care  and  skill  than 
formerly,  and  have  been  corrected  in  accordance  with  decisions,  and 
made  more  distinct  and  fjjecise  with  the  growth  of  actuarial  ex- 
perience (A).  Fire  and  lil'e  policies  are  drawn  as  legal  and  not 
mercantile  documents,  and  there  are  not  many  cases  in  which 
they  can  be  construed  with  reference  to  mercantile  custom  except 
in  floating  policies  by  wharfingers  and  others.  In  America  the 
tendency  is  the  same  (t). 

Custom  may  control  ambiguous  meaning. — When  the  interpretation 


(&)  Ibid.,  1  App.  Cas.  510,  45  L.  J.  761,  35  L.  T.  N.  S.  445,  24  W.  R.  9ol. 

(c)  Kotman  v.  Anchor  Co.,  4  C.  B.  N.  S  470,  27  L.  J.  C.  P  275,  81  L.  T,  0. 
S.  202,  0  W.  R.  688,  4  Jur.  N.  S.  712.  IHtton  v.  Accidental  Death,  17  C.  B.  N. 
S.  122,  34  L.  J.  C.  P.  28.  Smith  v.  Accidental  «fcc.,  Co.,  22  L,  T.  N.  S.  861,  89 
L.  J.  Ex.  211,  L.  R  6  Ex.  803 

(d)  Life  Assocn.  Scotland  v.  Foster,  11  C  S.  C.  (3rd  series)  361,  371. 

(e)  9  App.  Cas  345,  51  L.  T.  ISO,  21  Sc.  L.  R.  590. 
(/)  Hargrove  v.  Smee,  G  Bing.  244,  per  Tindul,  C  J. 
(a)  Meyer  v.  Isaac,  6  M.  &  W.  005,  012,  per  Alderson,  B. 


(ft)  See  Pearson  v.  Commardal  Union,  1  App  Cas.  510,  per  Lord  O'Haran. 

(i)  North  British  and  Mercantile  v.  Liverpool,  London  and  Globe,  40  L.  J. 
Ch.  537  6  Ch.  D.  569,  86  L.  'J'.  N.  S.  629.  North  British  and  Mercantile  v. 
Mofat,  L.  R.  7  C.  P.  26,  41  L.  J.  C.  P.  1,  25  L.  T  N.  S  062,  20  W.  B.  114. 

61 


f 


'32 


THE  LAWS  OF  INSURANCE. 


.»* 


of  words  or  the  construction  of  a  clause  in  the  pohcy,  that  may 
be  underPtood  in  a  sense  more  or  less  extensive,  has  not  been  fixed 
by  judicial  decisions,  parol  evidence  may  be  admitted  to  show 
whether  they  have  obtained  by  use  and  practice  between  the 
assurers  and  the  assured  any,  and  what,  known  and  definite  im- 
port (it).    The  usage  if  proved  will  govern  the  construction  (O- 

Wards  construed  in  p^ar  sense —When  any  doubt  arises  as  to 
the  meaning  of  a  word  the  Courts  will  usually  construe  it  m  its 
popular  and  not  in  its  philosophical  sense,  on  the  principal  that 
the  parties  expressed  themselves  in  the  ordmsLTy  language  of  men 
of  business  and  owners  of  property,  who  have  insured  or  who  are 
about  to  insure  (m). 

For  instance,  fire  will  not  be  held  to  include  explosion,  even 
where  the  explosion  is  due  to  ignition,  nor  gas  held  to  include  all 

that  chemists  would  include  under  the  word. 
[*  32  ]    *Ci'>itom  cannot  cmUradict  lanffuage  of  policy.— Frimary  stress 
must  be  laid  on  the  language  of  the  policy.    If  that  be  clear, 
no  custom  can  be  admitted  to  contrad^'ct  it,  and  ho  custom  which 
is  not  a  general  custom  of  trade  will  be  adniitted  (w). 

This  applies  to  all  contracts  of  insurance,  as  to  other  mercantile 
contracts.  Even  if  the  latter  are  in  short  terms,  unless  there  is 
dubiety  or  ambiguity  in  the  contract,  evidence  of  custom  will  not 
be  received  (o). 

Explanation  of  policy  by  custom. — Parol  evidence  may  be  adduced 
to  explain,  but  not  to  contradict,  n  written  document,  and  in  a 
commercial  contract,  mercantile  custom  will  be  the  dictionary 
whence  to  draw  explanations  (p).  But  Lord  Hatherly,  in  the 
same  case,  said  in  efiect  that  only  the  ver^  strongest  evidence  of 
custom  could  impose  a  non-natural  meaning  on  a  contract  whose 
terms  have  a  plain  natural  sense  and  meaning.  Policy  on  hard- 
ware does  not  include  gunpowder. — ^Thus  a  policy  on  a  general  stock 
of  hardware  will  not  cover  gunpowder,  and  if  there  be  a  condition 
against  storage  of  gunpowder,  parol  evidence  will  not l>o  admissi- 
ble that  the  parties  understood  hardware  to  include  gunpowder  in 
canisters  (q). 

What  covered  by  word  lirwn.—I{  a  person  who  is  not  a  linendraper 
insures  against  a  fire  his  "  stock-in-trade,  household  furniture,  linen, 
wearing  apparel  ahd  jjlate,"  the  policy  will  not  include  and  protect 
linendrapery  goods  subsequently  purchased  on  speculation;  the 


(k)  Sclera  v.  Bridge,  2  Doug.  527. 
/)  CroflK  V.  Marshall,  7  C.  &  P.  697. 

(m)  Sianhyj.Wtstem  Insurance,  per  Kelly,  C.  B.,  87  L.  J.  Ex.  73,  I..  R.  8 
Ex.  71,  17  L.  T.  N.  8  518,  10  W.  R.  801). 

/,  ^?^  /i»bertson  v.  Marjonbanks,  2  Stark  670,    lilackett  v.  lioffal  Exchange,  2 
C.  &.  J.  244,  per  Lyndhurst,  C.  B.  (249). 

Knl^l/^^a*  Xi  '?'""i'  ^  -^''P-  ^'"''  '^^  *^"»  l'^""  ^^"'■'J  Gordon  ;  40  L.  J.  Q.  B. 
Ool,  80  J i.  1.  N.  r.   857. 

(p)  IIowcH  V.  Shand,  2  App.  Cas.  408,  per  Lord  Cairns,  25  W.  R.  730. 
„^llJ^<^'>l] ;i  tiffiford  firt,  87  U.  C.  (Q.  B.)  487.    See  lilackett  v.  linyal 
Jbxvnange,  2  C.  &.  J.  244. 

52 


ir) 

is) 
827.. 

(0 
17  \V. 
27  W. 

(«) 
1070  U\ 

(*) 
ance  v. 
supra, 

(.y) 

29,  J.. 
J.  C  r 

(«) 

{a) 

Jur.  N 


CONSTRUCTION  OF  POLICY. 


♦34 


-word  linen  in  the  policy  will  be  confined  to  household  linen,  or 
linen  used  as  apparel  (r). 

Baker*8  stock. — ^The  stock-in-trade  of  a  baker  does  not  mean  hia 
bre.ad  only  (s). 

*  Fraud  in  obtaining  policy.  Acquiescence.  Acceptance  of  [*33] 
premium  after  discovering  fraud. — ^A  policy  obtained  by  fraud, 
or  by  a  breach  of  the  high  degreee  of  good  faith  required  as  be- 
tween insurer  and  as6ured,beingonly  voidable,  the  party  defrauded, 
whether  insurer  or  assured,  must  take  steps  to  avoid  the  contract 
(t),  or  he  will  be  held,  by  his  quiescence,  to  have  assented  to  the 
contract  and  elected  to  treat  it  as  valid.  If  the  insurer  discovers 
that  he  has  been  induced  by  fraud  to  grant  the  policy,  and  after 
such  discovery  exicepts  premiums  and  treats  the  policy  as  good,'it 
t"ould  seem  .l._;  he  would  thereafter  be  estopped  from  denying  its 
\  .idity,  more  especially  if  he  allows  the  policy  to  be  assigned  to  a 
bona  fide  holder  for  value  (u). 

.  Courses  open  to  insurer  from  whom  polisy  obtained  by  fraud. — There 
are  three  courses  open  to  the  insurer  on  discovering  that  lie  ha^  been 
induced  to  grant  the  policy  through  fraud  of  the  assured — 

1.  To  refuse  to  receive  further  premiums,  and  repudiate  the  con- 
tract  after  discovering  the  fraud. 

2.  To  seek  cancellation  of  the  policy,  offering  at  the  same  time 
to  return  all  premiums  paid  (x). 

3.  If  the  policy  has  matured,  by  defending  any  action  ^ot  recovery 
of  the  insurance  money  (y). 

Fraud  of  insurer  where  by  terms  of  policy  no  action  maintainable. — 
Fraud  iu  inducing  a  person  to  accept  a  policy  n'ill  not  render  the 
insurers  liable  thereon,  if  by  the  terms  of  the  policy  the  action  is 
not  maintainable  (z).  To  hold  otherwise  would .  be  to  permit 
recovery  on  a  contract  other  than  that  made  (a).  The  only 
remedy  *is  to  repudiate  the  contract  and  seek  rescission  ana  [*34] 
return  of  premium. 


(r)  Watchorn  v.  Longford,  8  Camp.  428. 

(s)  Moadinger  v.  Mechanics'  Fire,  &c ,  2  Hall  (N.  Y.)  490,  2  N.  Y.  (Sup.  Ct.) 
537.. 

(<)  British  EquUable  v.  G.  W.  R  ,  88  L.  J.  Ch.  132,  314,  20  L.  T.  N.  S.  422, 
17  w.  11.  501.  London  Assurance  v.  Manad,  11  Ch.  D.  863,  48  L.  J.  Ch.  831, 
27  W.  II.  444. 

{u)  Sec  per  Inglis,  L.  P.,  in  Scottish  Equitable  v.  Buist^  4  C.  S.  C.  (4th  Reries) 
1070  to  1082. 

(x)  Prince  of  Wales  Assurance  Co.  v.  Palmer,  25  Beav.  005.  London  Assur- 
ance  v.  Mansel,  11  Ch.  D.  303,  372,  supra.  British  Equitable  v.  G.  IV.  R.,  eide 
supra,  note  ((). 

(y)  London  and  Provincial  Marine  v.  Seymour^  17  Eq  85,  43  L.  J.  Ch.  120, 
20,  L.  T.  N.  8.  041,  22,  W.  II.  201.  Sennwur  v  London  and  JVovindal,  42  L. 
J.  C  P.  Ill  note,  27  L.T.  N.  S  417 

(«)  Tebbeits  v.  Hamilton  Mutual  Fire,  86  Mass.  (3  Allen)  509. 

(a)  FowUr  v  Scottish  Equitabie.  28  L.  J.  Ch.  525,  32  L.  T.  110,  7  W.  R.  5,  4 
Jur.  N.  S.  1160. 

08 


r 


84* 


THE  LAWS  OF  INSURANCE. 


If  the  insured  had  a  right  to  rescind,  and  acted  on  the  contract, 
he  canaot  subsequently  rescind  (h). 

Imurera  7wt  stopped  from  pleading  vmnt  of  insurable  interest  by  reason 
of  failure  informer  action  to  cancel  policy  for  fraUd.~U  the  insurers 
have  sought  to  cancel  a  policy  on  the  grounds  of  fraud  in  the  ap- 
plication, not  going  to  the  interest  of  the  assured,  and  have  failed, 
they  will  not  be  stopped  by  the  former  judgment  from  pleading  to 
an  action  on  the  policy  that  the  assured  had  no  interest  in  the  life 
on  which  the  pohcy  was  granted  (c). 

Illegalinsurance.—lmnra,ncejpn  an  illegal  undertaking  is  void. 
This  is  well  understood  in  marine  insurance  (d).    Few  c  ises  could 
be  suggested  of  land  insurance  on  buildings  used  for  an  illegal  pur- 
pose in  this  country.    But  in  Americr  cases  are  common.    Thus 
insurance  on  spirits,  and  casks  containing  them,  in  a  State  where  an 
anti-liquor  law  was  in  force,  has  been  held  void  (e),  and  also  one 
on  an  unlicensed  billiard  and  drinking  saloon  (/).    But  where  the 
policy  was  on  the  stock  of  a  chemist  who  had  liquor  unknown  to 
the  insurers  for  illegal  sale,  the  Court  held  tliat  there  was  nothing 
to  show  the  insurers  that  the  object  of  the  contract  was  illegal  (g). 
Test  whether  Uleaality  avoids  policy. — Tlie  test  question  there  is, 
whether  the  violation  of  law  is  the  direct  purpose  of  the  contract 
or  purely  collateral  to  and  independent  of  it  (A).     But  it  would 
seem  more  in  accordance  with  the  policy  of  the  law  to  hold  that  no 
one  should  be  allowed  to  receive  indemnity  in  respect  of  property 
used  for  an  unlawful  purpose,  if  that  use  continues  down  to  the 
date  of  the  loss. 


(6)  Uoud  V.  Union  Ins.  Co..  2  Pugsley  (New  Brans.)  498.  See  Clarke  y. 
Dickson,  E  B.  &  E.  148,  83  L.  T.  136,  7  W.  R.  448. 

(c)  JFirguson  v.  Maasachitaetts  M.  <t  D.  Co.,  22  Hun.  (N.  Y.)  320. 

id)  Cunardv.  Hyde,  2  El.  &  El   1.  ^  .       ' 

(«)  Kettff  V.  Home  Ins  Co.,  07  Masa  288 

(/)  Johnson  v.  Union  Mutual  Fire  Co.,  127,  Masa.  555. 

(a)  Carriaan  v.  I^fcoming  Fire,  88  Am.  Rep.  687.  Niagara  Fire  v.  DerrraSr^ 
12  Mich.  124  ^  -WF 

(A)  Boardman  v.  Merrimack  Ins.  Co.,  C2  Mass.  (8  Gush.)  583.  Hinckleu  v. 
Oermania  Fire  Co.^  140  Mass.  88,  64  Am.  Rep.  445. 


,m 

L.  J. 


M 


H 


C.I 


I)  4l 


INSURABLE   INTEBEST. 


*36 


^CHAPTER  II. 


[*35] 


INSURABLE   INTEBEST. 

Any  rnie  vntk  interest  can  insure. — Any  person  may  insure,  pro- 
vided that  he  has  an  insurable  interest  (hereinafter  defined)  in  the 
life  or  property  to  be  insured^  It  is  sometimes  said  that  minors 
cannot  enter  into  contracts  of  insurance.  But  there  seems  no  rea- 
son why,  if  insurers  are  willing;  to  enter  into  a  contract  of  insur- 
ance With  an  infant,  he  should  not  be  able  to  contract  with  them 
in  the  same  manner  as  he  might  enter  into  other  contracts  which 
are  for  his  benefit 

Infants. — The  rule  being  that  a  contract  by  an  infant  wjiich  is 
avoidable  only  by  him  and  not  absolutely  void  is  binding  upon 
the  other  contracting  party  until  avoided.  The  ))rivilege  of  avoid- 
ance is  that  of  the  infant  only,  and  not  that  of  the  other  party 
with  whom  he  contracts  (a).  But  if  an  infant,  after  having  paid 
the  premium  and  had  the  benefit  of  the  insurance  for  a  time,  were 
to  repudiate  the  contract,  it  would  seem  that  having  had  the  con- 
sideration in  part  he  could  not  upon  repudiation  recover  the  pre- 
mium paid  by  him  (6). 

Husband  and  toi^e. — A  married  woman  may  insure,  and  is  pre- 
sumed to  have  an  insurable  interest  in  the  life  of  her  husband  (c). 
But  the  husband  is  not  presumed  to  have  such  an  interest  in  the 
life  of  his  wife  (d),  except,  perhaps,  in  Scotland  (e)  and 
America  (/). 

*By  the  married  Women's  Property  Acts,  1870,  (g)  and  [*36] 
1882  Xh\  a  married  woman  may  insure  her  own  or  her  hus- 
band's life  for  her  separate  use ;  and  by  the  same  Act  a  policy 
effected  by^a  married  man  on  his  own  life,  and  expressed  upon  the 
face  of  it  to  be  for  the  benefit  of  his  wife  or  of  his  wife  ana  child- 
ren, or  any  of  them,  shall  enure  and  be  deemed  a  trust  for  the  ben- 


'  Where  lose  is  made  payable  to  a  third  ]ierson.  he  has  prima  facie  interest  in 
the  contract  although  ho  may  not  have  an  insurable  interest  in  the  property  in- 
sured.   Parks  V.  Connecticut  Fire  Insurance  Co.,  26  Mo.  App.  511. 

(a)  Leake  Contracts,  652 

(6)  Holmes  v.  Blogg,  8  Taunt.  608.  Ex  parte  Tat/lor,  8  D.  M.  A  G.  254,  2» 
L.  J.  Bkcy  86. 

(c)  Heed  v.  Roi/nl  Exchanffe,  2  Peake  (Add.  Cas.)  70. 

id)  Hnlford  v.  Ki/mer,  lO'lJ.  &  C.  725. 

(e)  Wiffht  V  Brown,  11  Court  Sees.  Ca.  (2d  series)  460,  and  see  lU  apd  17 
Vict.  c.  84,  B.54 

(/)  Currier  v.  Continental  «tc.,  Co.,  62  Am.  Rep.  184. 

(g)  m  &  84  Vict.  c.  03,  r.  10. 

(A)  45  &  46  Vict.  c.  75,  it.  11. 

66 


♦87 


THE  LAWS  OF  INSURANCE. 


Ii  i 


efit  of  his  wife  for  her  separate  use,  and  of  his  children,  or  any  of 
them,  according  to  the  interest  so  expressed,  and  shall  not,  so  long 
as  any  object  of  the  trust  remains,  be  subject  to  the  control  of  the 
husband  or  his  creditors,  or  form  part  of  his  estate;  and  a  trustee 
thereof  may  be  appointed  by  a  judge  of  the  Chancery  Division  of 
the  High  Court,  or  by  the  judgfe  of  the  County  Court  within  the 
jurisdiction  of  which' the  insurance  office  is  sifuate.  If  it  shall  be 
proved  that  the  policy  was  eflfected  and  premiums  paid  by  the 
husband  with  intent  to  defraud  his  creditors,  they  shall  be  entitled 
to  receive  out  of  the  sum  secured  an  amount  equal  to  the  premiums 
BO  paid  (i). 

Uamblmg  ad, — ^The  existence  of  an  insurable  interest  as  the 
bacis  of  a  contract  of  insurance  is  made  necessary  by  the  statute 
called  the  Gambling  Act  (k),  which  enacts,  as  follows: — 

Sec.  2.  Whereas  it  has  been  found  by  experience,  that  the  mak- 
ing insurance  on  lives,  and  other  events  wherein  the  assured  shall 
have  no  interest,  hath  introduced  a  mischievous  kind  of  gambling, 
be  it  enacted  that  from  and  after  the  passing  of  this  Act  no  insur- 
ance ^hall  be  made  by  any  person  or  persons,  bodies  politic  or  cor- 
porate, on  the  life  or  lives  of  any  person  or  persons,  or  on 
[*37]  any  other  event  or  events  whatsoever,  wherein  *the  person 
or  person  for  whose  use,  benefits,  or  on  whose  account  such 
policies  shall  be  made,  shall  have  no  interest,  or  by  way  of  gaming 
and  wagering;  and  that  every  assurance  made  contrary  to  the  true 
intent  and  meaning  hereof,  snail  be  null  and  void  to  all  intents  and 
purposes  whatsoever. 


Sec.  3.  And  be  it  further  enacted,  that  in  all  cases  where  the  insured 
hath  interest  in  such  life  or  lives,  event  or  events,  no  greater  sum 
shall  be  recovered  or  received  from  the  insurer  or  insurers  than  the 
amount  or  value  of  the  interest  of  the  insured  in  such  life  or  livesj 
event  or  events. 

U  Oeo.  Ill  e.  4S,  in  America.-— ThiB  statute  was  never  in  force  in 
America,  but  has  been  there  interpreted  as  declaratory  only  of  the 
common  law  (I);  and  this  view  is  supported  by  English  cases  (w), 
at  anv  rate  so  far  as  concerns  fire  insdrance. 

Ireland.— In  Ireland  the  Gambling  Act  applies  to  policies  ex- 
ecuted after  1st  Nov.  1866  (n). 

What  is  an  insurable  interest,  per  Lord  Eldon.— What  will  be  an  in- 
surable interest  within  the  statute  is  not  easy  to  define.    Lord  Eldon 

(i)  Holt  y  Everall,  L.  R.  2  Ch.  D.  ( C.  A. )  260,  «  L.  J.  Ch.  438,  U  L.  T 

(*).14  Geo.  Ill  c.  48  (a.d.  1774) 

(/)  Rme  V.  Mutual  Ben^t  Life  Co.,  28  N.  Y.  B16. 

n)  29  &  80  Vict.  c.  42. 
66 


(0). 

(p) 


INSURABLE  INTEREST. 


*39 


said  (o),  "  Since  the  18  Geo.  II.  ( p)  it  is  clear  that  the  assured  must 
have  an  interest,  whatever  we  understand  by  that  term.  In  order 
to  distinguish  that  intermediate  thing  between  a  strict  right  or  a 
right  derived  under  a  contract  and  a  mere  expectation  or  hope 
which  has  been  termed  an  insurable  interest,  it  has  been  said  in 
many  cases  to  be  tha*.  which  amounts  to  a  moral  certainty.  I  have 
in  vain,  however,  endeavored  to  find  a  fit  definition  for  that 
which  is  between  a  certainty  and  an  expectation,  *nor  am  I  able  [  *  38  ] 
to  point  out  what  is  an  interest  unless  it  be  a  right  in  the  property 
or  a  right  derivable  out  of  some  contract  about  the  property  insured, 
which  in  either  ca.'f"  may  be  lost  upon  some  contingency  afi'ecting 
the  possession  or  enjoyment  of  tne  party.  Expectation,  though 
founded  upon  the  highest  probability,  is  not  interest,  and  it  is 
equally  not  interest  whatever  might  have  been  the  chances  in  favor 
of  the  expectation."  His  lordship  went  on  to  say,  "  If  moral  cer- 
tainty be  a  ground  for  insurable  interest,  there  are  hundreds,  per- 
haps thousands,  who  would  be  entitled  to  insure.  First  the  dock 
company,  then  the  dockmasters,  then  the  warehouse-keeper,  then 
the  porter,  then  every  other  persdn  who  to  a  moral  certainty  would 
have  anything  to  do  with  the  property,  and  of  course  get  something 
by  it.  Suppose  A.  to  be  possessed  of  a  ship  limited  to  B.,  in  case 
A.  dies  without  issue;  that  A.  has  twenty  children,  the  eldest  of 
whom  is  twenty  years  of  age  (!),  it  is  a  moral  certainty  that  B.  will 
never  come  into  possession,  yet  this  is  a  clear  interest.  On  the 
other  hand,  suppose  the  case  of  the  heir-at-law  of  a  man  who  has 
an  estate  worth  £20,000  a  year,  and  is  ninetjr  years  of  age :  upon 
his  deathbed  inestate  and  incapable,  from  incurable  lunacy,  of 
making  a  will,  there  is  no  man  who  will  deny  that  such  heir-at-law 
has  a  moral  certainty  of  succeeding  to  the  estate,  yet  the  law  will 
not  allow  that  he  has  any  interest  or  anything  more  than  a  mere 
expectation." 

"Conhidering,"  in  the  words  of  the  same  learned  judge,  "the  cau- 
tion with  which  the  Legislature  haa  provided  against  gambling  by 
insurances  upon  fanoiful  property,  it  is  certainly  desirable  that  no 
purely  sentimental  interest,  s\ich  as  an  expectation  or  an  anxiety, 
should  be  made  the  ground  of  a  policy." 

Definition  of  interest^  per  Lord  Blackburn. — Lord  Blackburn  said, 
"  I  know  no  better  dennition^of  an  interest  in  an  event  than  that  by 
Lawrence,  J.,  that  if  the  event  happens,  the  partv  will  gain 
*  an  advantage ;  if  it  is  frustrated,  he  will  suffer  a  loss  "  (q).    [  *  39  ] 

Not  necessary  to  state  exact  interest  in  policy. — It  is  not  neces- 
sary in  a  policy  of  Insurance  to  state  the  precise  nature  of  the  in- 
terest, and  whether  the  property  be  absolute  or  special.    A  con- 
signor, a  consignee,  a  prize  agent  (as  such),  may  all  insure ;  but 


(o)  Lucena  v.  Crawford,  2  N.  R.  269,  821,  1  Taunt.  825. 

{p)  10  Geo.  II.  c.  87,  relates  lo  marine  insurunec. 

(g)  Wilson  v.  JoM8,L.  R.  2  Ex.  150,  per  Blockburn,  J.,  80  L.  J.  Ex.  78,  16 
L.  T  N.  "      "" 


8.  009,  15  W.  R.  485. 


57 


40* 


THE  LAWS  OP  INSURANCE. 


mi    in 


what  the  interest  is  (r)  in  the 


they  arc  not  bourn'  to  specify 

absence  of  special  stipulation.  .  .    ,.  v-i    x 

Re-inmrance.— Any  one  who  by  contract  is  liable  to  pay  any 
money  in  case  of  the  loss  of  anything  has  an  insurable  interest  m 
that  thing.  This  includes  insurers.  They  have  an  interest  in  the 
subject-matter  of  a  policy  which  will  support  a  re-insurance, 
which  is  now  in  every  case  lawful  by  Enghsh  law  (s). 

As  a  general  principle  the  Courts  will  lean  m  flavour  of  an  insur- 
able interest  if  possible  without  assuming  facts  which  do  not  exist, 
or  stretching  the  law  beyond  its  proper  limits  (0; 

Own  life. — In  his  own  life  a  person's  insurable  interest  is  consid- 
ered to  be  sufficient  to  entitle  him  to  recover  whatever  sum  he 
may  have  it  insured  for,  and  this  is  so  if  the  insurance  is  for  a  por- 
tion of  his  life  only  («). 

NominaUy  own  life  but  redly  another. — But  the  law  will  not  allow 
the  provisions  of  the  statute  to  be  evaded  by  an  insurance  being 
nominally  effected  by  a  person  on  his  own  life,  but  really  for 
another  person  who  pays  the  premiums,  and  to  whom  the  policy 
is  assigned.  Payment  of  p'emiuma  not  conclusive  evidence  whose  policy 
is. — The  mere  circumstance,  however,  that  some  other  party  paid 
the  premiums  would  not  per  se  be  sufficient  evidence  that 
[*40]the  insurance  was  not  *for  the  benefit  of  the  person  in 
whose  name  it  was  effected  (v). 

Assignee  of  policy.— The  bond  fine  assignee,  whether  for  valuable 
consideration  or  not,  of  a  person  who  has  insured  his  own  life  has 
as  full  a  right  to  the  policy-money  as  his  assignor  would  have  had 
without  such  assignee  having  any  interest  in  the  life  of  the  assignor 
beyond  the  assignment  itself  (x). 

Parent  in  child's  life.— A  parent  has  not  by  virtue  of  his  relation- 
ship only  an  insurable  interest  in  the  life  of  a  child  (y).  And 
where  a  iather  effected  an  insurance  for  his  own  benefit,  but  in  the 
faame  and  on  the  life  of  his  son,  in  which  he  had  no  insurable  in- 
terest, on  the  death  of  the  son  it  was  held  that  as  between  the  com- 
pany and  the  father  the  policy  was  void,  but  as  between  the 

(r)  Crowley  v.  Cohen,  8  B.  &  Ad.  478, 1  L.  J.  K.  B.  168  (1832). 

{«)  19  Geo.  II.  c  87,  s.  4j  forbidding  re-assurance,  is  repealed.  The  statute 
now  in  force  on  this  subject  is  80  &  31  Vict.  c.  28.  The  American  law  is  to  be 
found  in  New  York  Bowery  Fire  v.  New  York  Fire,  I  <  \Veudell  (N.  Y.)  359. 

(0  Stock  V.  Inglis.  12  Q.  B.  D.  584,  10  App.  Cas.  268. 

(m)  Wainwright  v.  Bland,  1  Mood.  &  Rob.  4iU,  1  M.  &  W.  82,  5  L.  J. 
Ex.  147. 

(v)  Shilling  v.  Accidental,  27  L.  J.  Ex.  17,  1  F.  &  F.  116,  2  H.  &  N.  48,  fl 
W  R.  567.  Scott  V.  Rose,  Long  &  Towns.  54.  8  Ir.  Ea  Rep.  170.  Vezina  v. 
New  York  Life,  6  Canada  ( S.  C. )  30.  Armstrong  v.  Mutual  Life,  20  Blatch. 
(U.  S.)  498.  , 

(«)  AshUy  V.  Ashley,  8  Sim.  149.  Mutual  Life  Co.  v.  Allen,  52  Am. 
Rep.  245 

(y)  HalfoTd  v.  Kymer  10  B.  k  C.  724.  See  as  to  America,  Curner  v.  Con- 
tinental  Life  Assurance  Co.,  62  Am.  Rep.  184. 


(2) 

24  W. 

(a)  , 

(6)] 

{c)  1 

Associc 

(rf) 
(«) 

(./•)  J 
18  Jur. 
V.  Ingl 

.  (•'^^  - 
A  &K 

669,  15 

»Rc 
Appeal 


1 


INSURABLE  INTEREST. 


41 


father  and  the  son's  estate  the  father  was  entitled  to  the  money  for 
his  own  benefit  (2). 

Son  in  Jaiher'a  life. — A  son  has  an  insurable  interest  in  the  life  of 
a  father  who  supports  him,  but  not  in  the  life  of  a  father  depend- 
ing on  hira  for  support  (a). 

Sister  and  brother. — A  sister  has  an  insurable  interest  in  the  life  of 
a  brother  who  supports  her  (6). 

General  rule. — The  general  rule  would  seem  to  be,  that  where  the 
person  who  insures  the  life  of  another  is  so  related  to  that  other  as 
to  have  upon  him  a  claim  for  support  enforceable  by  law,  there  the 
relationship  gives  an  insurable  interest",  and  where  a  relative  is  as 
a  fact  supported,  he  has,  according  to  American  decision,  an 
insurable  iiiterest  in  the  life  of  him  by  whom  he  is  *sup-  [*41] 
ported  (c),  but  mere  natural  love  and  affection  is  not  suffi- 
cient per  86  to  constitute  insurable  interest  (d). 

Morai  certainty.  Expected  proJUa. — Moral  certainty  that  a  person 
will  succeed  to  property  does  not  suffice  to  give  him  an  insurable 
interest  in  such  property.  Nor  will  mere  expectation  of  profit  be 
sufficient,  for  as  Lord  JElidon  said, "  I  send  my  ship  to  India,  I 
expect  profit  from  the  voyage;  if  the  ship  is  lost,  my  expectation  is 
defeaterl,  but  of  those  expected  profits  the  law  can  have  no  consid- 
eration '*  (e). 

Profits  on  sale  of  goods. — An  insurance  may,  however,  be  effected 
on  profits  to  arise  from  the  sale  of  goods,  provided  the  assured  has 
an  msurable  interest  in  such  goods  (/). 

Profits.  Profits  of  business. — Profits  may  be  insured  on  the  prin- 
ciple of  their  forming  an  additional  part  of.  the  value  of  the  goods, 
but  they  must  be  insured  qud,  profits,  and  cannot  be  recovered 
merely  as  an  incidental  part  of  the  loss.  Therefore,  under  an  in- 
surance by  A.  of  his  interest  in  the  "Ship  Inn  and  offices,"  A.  could 
not  recover  compensation  for  the  loss  of^  profits  in  his  business  as 
an  innkeeper  in  the  interval  between  the  fire  and  the  rebuilding  (g). 

Profits  on  cargo. — When  the  insured  shipped  a  cargo  of  goods  to 


(2)  Worthington  v  Curies,  1  Ch.  D.  419,  45  L  J.  Ch.  259,  83  L.  T.  N.  S.  828, 
24  W.  II.  t28. 

(a)  Shillinff  v.  Accidental,  ubi  sup.  Howard  v.  R^uge  Co.,  54  L.  T.  (M 1. 
(6)  Bliss  Life  Assurance,  17. 

(0)  Lord  V.  Dull,  12  Mass  116  (118,  (8rd  edition).  Elkhart  Mutual  Aid,  die 
Association  v.  Houghton,  53  Am  Rep.  515. 

(d)  Rombach  v.  Piedmont  Co  ,  48  Am.  Rep.  239. 

(e)  Lucena  v.  Cratrford,  2  N.  R.  at  8S4.  1  Taunt.  825. 

{f)  M'Swinei/  v.  Royal  Exchange,  Ac,  Co.,  14  Q.  B.  646,  19  L.  J.  Q.  B.  222 
18  .Iiir.  489.     iitockdaie  v.  Dunlop,  6  M.  &  W.  224,  9  L.  J.  N.  S.  Ex.  88      Stock 
V.  Inglis,  12  Q  B.  D.  564   10  App.  Cas.  268. 

(.7)  Sun  tire  v.  Wright,  8  N.  and  M.  819,  1  A  &  E.  621.  Wright  v.  Pole,  1 
A  &  E  6'1  Wilson  y.  Jones,  L.  R.  2  Ex.  189,  86  L.  J.  Ex.  78.  15  L.  T.  N.  8, 
669,  15  W.  R.  485. 

*  Relationship  of  nephew  and  aunt  is  not  au  insurable  interest.  Corsou'a 
Appeal,  113  Pa.  St.  488. 

59 


»43 


THE   LAWS  OF  INSUBANCB. 


IS't   ' 


liVi't 


be  carried  on  a  tradiiig  voyage,  he  was  held  to  have  an  insurable 

interest  in  the  profits  to  arise  from  the  cargo  {h).  •  ,  w-n 

Freight.— A  sMpper  has  an  insurable  interest  in  freight  (t), 

r*42]  and  a  consignee  or  a  factor  may  effect  an  insurance  m  *re- 

spect  of  his  commission  if  the  consignment  takes  place  (A;). 

iVw«.—So  may  captors,  because  they  have  a  lawful  possession, 
coupled  with  a  well-founded  expectation  that  their  claim  to  retain 
the  goods  will  be  allowed.  In  these  cases  there  is  either  an  abso- 
lute or  special  property  in  possession  (Z).  . 

Bankrupt.  Executim  debtor.— A  bankrupt  retains  an  insurable 
interest  in  his  estate  (m).  And  in  America  a  debtor  after  execution 
has  been  held  to  have  an  insurable  interest,  since  liability  continues 
till  after  sale,  and  the  property  out  of  which  his  debt  might  be  sat- 
isfied would  be  gone  in  case  of  fire  (n). 

There  must  be  interest  at  time  of  insuring  and  of  loss.— In  a  case  of 
fire  insurance,  the  party  insured  must  have  an  insurable  interest  at 
the  date  of  the  policy  and  at  the  time  the  fire  happens,  and,  there- 
fore, where  a  lessee  insured  and  after  the  lease  had  expired  the 
house  was  burnt  down  and  the  policy  was  assigned  subsequently 
to  the  fire,  the  assignee  was  held  not  entitled  to  obtain  the  money 
from  the  insurance  office  (o). 

Theatrical  mmiager  and  actor. — ^A  theatrical  manager  has  an  in- 
sArablo  interest  in  the  life  of  an  actor  engaged  by  him  (p). 

Heir  of  person  non  compos. — The  heir  of  a  person  who  through 
idiocy  or  lunacy  is  incompetent  to  make  a  will  has  not  such  an  in- 
terest in  the  life  of  such  person  as  to  enable  him  to  insure  his  life, 
and  thus  provide  against  possible  loss  of  the  inheritance  through 
his  recovery  (</). 

Borrow  from  insurer. — An  insurance  company  lending 
[*43]  money  may  validly  *  agree  with  the  borrower  that  he  shall 
I  insure  his  life  to  a  greater  amount  than  the  debts,  and  assign 

the  policy  to  the  company  as  security  (r).    But  in  such  case  the 
interest  supporting  the  policy  is  the  debtor'^,  not  the  creditor's. 

Employer  and  employed. — A  contract  of  employment  at  a  salary 


(A)  Eyre  v.  Glover,  16  East,  218.  Hodgson  v.  Glover,  6  East  810.  Barclay 
V.  Cousins,  2  East  540. 

(t)  Thompson  v.  Taylor,  0  T.  R.  4T8.  Flint  v.  Fleming,  1  B.  &  Ad.  45. 
Devaux  v.  T Anson,  7  Scott  C07,  5  Biiig.  N.  C.  519. 


Jur.  152.  Goulstone  v.  Royal,  1  F.  &  F.  270.  Lazarus  v.  Commonwealth  Co., 
86  Mass.  (19  Pickering)  81. 

(n)  Insurance  Co.  v.  Thompson,  95  U.  S.  (5  Otto)  547. 

(o)  Sadlers  Co.  v.  Badcock,  2  Atk.  554,  1  Wils.  10.  Lynch  v.  Dahell,  4  Bro. 
P.  C.  431. 

(p)  Law  Mag.  vol.  22,  N.  S.  C47.  Parsom  v.  Bignold,  18  Sim.  618,  15  L.  J. 
Ch.  879,  7  Jur.  591. 

(q)  Lucena  v.  Crawford,  2  N.  R.  824,  1  Tnuut.  825. 

(r)  Downcs  v.  Green,  12  M.  &  W.  481,  8  Jur.  890. 

60      • 


INSURABLE   INTEREST. 


*44 


for  a  term  of  years  gives  the  employed  an  insurable  interest  in  the 
employer's  life  during  the  unexpired  portion  of  the  term  (s). 

Railway  companies'  liability  for  fire  to  hofoaeanear  line. — In  America, 
railway  companies,  in  respect  of  their  liability  for  fire  to  houses  or 
property  near  the  line,  have  an  insurable  interest  in  such  houses, 
unless  by  statute  or  otherwise  they  are  specially  exempted  from 
such  liability. ,  In  England  the  liability  is  less  extensive  (t). 

Employers  and  workmen.  Employera  of  clerks^  &c. — Employers  of 
labour,  when  liable  to  their  workmen,  whether  by  Common  Law  or 
Statute  (m),  have  an  insurable  interest  in  the  safety  of  their  work- 
men. Employers  of  clerks  and  others,  whom  they  must  in  the 
course  of  their  business  entrust  with  money  or  thing  of  value,  can 
insure  against  loss  tlirough  their  dishonesty  (x). 

Interest  must  be  enforceable. — The  interest  will  not  amount  to  an 
insurable  interest  unless  it  be  one  capable  of  being  enforced  under 
a  binding  contract  or  a  legal  liability ;  a  mere  engagement  binding 
in  honour  would  not  suffice  iy). 

Amount  recoverable  is  the  value  of  interest  at  date  of  policy. — The  sum 
recoverable  under  a  life  policy  sur  autre  vie  is  limited  to  the  amount 
or  value  of  the  insured's  insurable  interest  in  the  life  insured 
at  the  date  of  the  *  policy  (z).  Consequently  if  the  assured  [  *  44  ] 
insures  the  same  interest  with  several  insurers,  he  can  re- 
cover from  them  all  only  the  value  of  his  interest,  and  therefore  if 
he  receives  that  value  from  one  of  them  he  can  claim  nothing  from 
the  others  (a). 

The  interest  must  be  lawful. — The  assured's  interest  must  be  lawful, 
and  therefore  interests  in  illegal  voyages  cannot  be  insured  if  the 
illegality  is  known  to  the  assured  (6),  and  all  gambling  interests  are 
excluded ;  such,  for  instance,  as  insuring  lottery  tickets  (c)  or  a 
policy  on  the  sex  of  a  person  (d).  Seamen's  wages  are  not  insur- 
able (e) )  and  where,  in  consideration  of  40  guineas  for  £100,  and  so, 

(a)  Ilebden  v.  West,  3  B.  &  S.  579,  32  L.  J.  Q.  B.  85,  7  L.  T.  N.  S.  854  11  W. 
R.  423,  9.Jur.  N.  S.  747.      * 
(t)  Muy  Ins.  98.    Jones  v.  Festinioff  Ry.,  L.  R.  8  Q  B.  733. 
(u)  43  &  44  Vict.  c.  42.    Henrif-Rifle  Barrel  Co.  v  Employers'  Liability  Cor^ 

f  oration,  Q.  B.  D.  27th  Mar.  1884.  Ratcliffe  v.  Ocean,  «tc.,  Co.,  Butt,  J.,  Leeds 
pring  Assizes,  1884. 

(x)  Towle  V.  National  Guardian,  5  I..  T.  N.  S.  193,  80  L.  J.  Ch.  900,  7  .Tur. 
N.  S.  1109,  10  N.  R.  49. 

(.?/)  Stnckdale  v.  Dvnlop,  0  M.  &.  W.  224,  233,  9  L.  J.  N.  S.  Ex.  83.  Stain- 
bank  v.  Fenning,  11  C.  B.  51,  16  Jur.  1082,  20  L.  J.  C.  P.  220,  Stainbank  v. 
Shepherd,  18  C.  B.  418  17  Jur.  1082,  22  L.  J.  Ex.  341. 

(«)  14  Geo.  III.  c.  48,  s.  3. 

(a)  Hebdon  v.  West,  8  B.  &  S.  679,  33  L.  J.  Q.  B  85,  11  W.  R.  423,  7  L.  T. 
N.  S.  854,  9  Jur.  N.  S.  547.  Law  v.  London  Lidisputable  Li fe  Pi dici/  Co.,  1  Kay 
&  J.  223,  24  L  J.  Ch.  196,  24  L.  T.  208,  1  Jur  N.  S.  179,  8  W.  R.  155. 

(6)  Wilson  V.  Rankin,  L.  II.  1  Q.  B.  103,  85  L.  J.  Q.  B.  87,  13  L.  T.  N.  S. 
564,  14  W.  R.  198.  Dndgeon  v.  Pembroke,  L.  R.  9  Q.  B.  681,  585,  31  L  T.  N. 
8.  81,  22  W.  R.  914    Cunard  v.  H>/de^  2  E.  &  E.  1,  20  L.  J.  Q.  B.  6. 


(ci  Jacques  V.  Golighthj  (1776),  2  Wm.  Bl.  1073. 

id)  Roebuck  v.  Ilamerton,  2  Cowp.  737. 

(e)  Webster  v.  de  Taatot,  7  T.  R.  157,  8  Kent  Comm.  209. 


61 


46* 


THE  LAWS  OP  INSURANCE. 


fi 


1*1 


9 

iMl. 


according  to  that  rate,  for  any  greater  or  less  sum,  several  per- 
sons. eA  for  themselves,  severally  agreed  to  pay  the  several 
sums  set  opposite  their  names  in  case  Brazilian  mining  shares 
should  on  or  before  a  certain  day  be  done  at  or  above  a  certain 
sum,  the  contract  was  held  to  amount  to  a  policy  of  insurance  and 

to  be  illegal  (/).  .     '  »       •  -i. 

.Lavrfidand  unlawful  interests  m  sam  ^jottcy.— American  writers 
raise  the  question  whether,  if  lawful  and  unlawful  interests  are  in- 
sured together,  the  whole  or  only  part  of  the  policy  is  vitiated.  This 
depends  on  whether  the  contract  is  separable  ornot,  lustas  the 
question  whether  premiums  are  in  part  returnable  depends  on 
whether  they  can  consistently  with  the  nature  of  the  risk  be  ap- 
portioned {g).  ,    , ,       ,        ^     .        . 

Ume.y  won  at  play.— The  holder  of  a  note  given  for  money 

f*45  ]  won  at  play  *has  not  an  insurable  interest  in  the  life  of  the 

maker  of  the  note  (A).  t     •      /  t     in 

Difference  between  policy  and  wager.— Mr.  Justice  (now  Lord) 
Blackburn  said,  "  I  apprehend  that  the  distinction  between  a  policy 
and  a  wnger  is  this:  a  policy  is,  properly  speaking,  a  contract  to 
indemnify  the  insured  in  respect  of  some  interest  which  he  has 
against  the  perils  which  ho  contemplates  it  will  be  liable  to  "  (i). 

Wager  policy. — A  wager  in  the  form  of  a  policy  upon  the  sex 
of  a  person  is  a  wagering  policy  within  14  Geo.  III.  c.  48,  for 
a  contract  in  the  form  of  a  policy  does  not  cease  to  be  a  policy 
because  the  subject-matter  of  the  insurance  is  not  exposed  to 
peril  (k). 

Wager  policy  premiums  not  recoverable. — And  where  a  son  insured 
the  life  of  his  mher,  ii^  which  ho  had  no  insurable  interest,  and 
paid  the  premiums  for  some  years,  and  the  father,  who  at  first  had 
no  knowledge  of  the  insurance,  became  aware  oi  it,  and  gave  no- 
tice to  the  company  that  he  object'^J  to  its  continuance,  it  was  held 
that  the  policy  was  a  wagering  policy,  and  therefore  the  son  could 
not  recover  the  premiums  (I). 

Ibntine. — A  life  policy  upon  the  tontine  principle  is  not  void  as 
a  gaming  contract  (m). 

Policy  assigned  to  third  person  who  pays  premiums  not  a  wager  policy. 
— A  man  applied  to  the  local  agent  of  an  insurance  company  for 
insurance  on  his  own  life.  His  proposal  was  accepted,  and  the 
policy  was  prepared  and  sent  to  the  agent.    The  applicant  did  not 

(/)  Paterito7i  v.  Powell,  2  L.  J.  N.  S.  C.  P.  18,  9  Bing.  820,  620,  2  Mo.  &  Sc. 
899,  773. 

(g)  Muy  Lis.  81.     . 

(h)  Dwycr  v.  Edk,  2  Park  Ins.  (8th  ed.)  914. 

(f)  Wilson  V.  Jones.  L.  R.  2  Ex.  150,  per  Blackburn,  J.,  30  L.  J.  Ex.  78. 
13  L.  T.  N.  S.  6(59,  15  \V.  R.  435.  '  ' 

{k)  Roebuck  v.  Hamerton,  2  Gowp.  707. 

{I)  Howard  v.  R^uge  Friendly  Society,  54  L.  T.  644. 

(m)  Simons  v.  New  York  Life,  88  Hun.  (N.  Y.)  817. 

62  < 


INSURABLE  INTEREST. 


*47 


Say  for  it,  80  a  third  j)erson  paid  the  premium  and  had  his  name 
lied  into  a  hlank  assignment  which  had  been  left  with  the 
agent  by  the  original  applicant,  and  the  majority  of  the  *Su-  [*  46  ] 
premc  Court  of  Canada  held  that  this  vtM  not  a  wager 
policy  (n). 

Different  kinds  of  interest  need  not  be  specified. — A  person  who  has 
different  kinds  of  interest  in  property  may  cover  them  all  by  one 
insurance  without  stating  in  tne  policy  the  number  or  nature  of 
the  interests  (o]).  But  the  subject-matter  of  the  insurance  must  be 
correctly  described  (p). 

Special  or  qualified  interest  sufficient. — An  insurable  interest  in 
mercantile  language  does  not  necessarily  import  an  absolute  right 
of  property  in  the  thing  insured.  A  special  or  qualified  interest  is 
equally  the  subject  of  insurance  (g). 

Possession  of  property  mil  suffice. — Property  without  possession 
will  constitute  insurable  interest  (r),  and  a  person  in  possessien  as 
the  apparent  or  presumptive  owner  has  such  an  interest  (s). 

lortious  disseizor, — In  America  a  tortious  disseizor  has  beeu  held 
to  have  an  insurable  interest  (t). 

Goods  sold  but  not  delivered. — Even  where  a  policy  is  "  on  goods 
sold  but  not  delivered,"  cases  may  arise  in  wliich  the  assured  is 
not  entitled  to  recover :  for  if  the  legal  title  has  vested  in  the  ven- 
dee, the  goods  are  in  law  delivered  even  if  not  removed  (w) ;  but 
if  the  words  "  not  removed  "  are  in  the  policy,  the  insureris  are 
liable  (x). 

Property  in  goods  purchased  remaining  in  vendor. — ^A  person  who 
bargains  for,  and  tikes  into  his  possession,  an  article  of  per- 
sonal property  on  a  hiring  *agreement,  one  of  the  terms  of  [*47  ] 
which  agreement  is  that  the  property  shall  remain  with  the 
seller  until  the  purchase  money  be  paid,  has  an  insurable  interest 
in  the  property,  though  the  money  is  not  fully  paid  (y). 

Building  on  another's  land. — A  man  insuring  a  house  in  his  pos- 
session built  on  the  wrong  land  owing  to  an  unskilful  survey  can 
recover  on  his  policy,  if  he  has  insured  bond  fide  (2). 

Afier'acquired  goods. — It  has  been  decided  in  Canada  that  policies 
cover  after-acquired  goods  which  have  been  substituted  for  those 


(n)  Vezina  v.  New  York  Life,  6  Canada  (S.  C.)  30. 

(0)  Carruthers  v.  Sheddoii,  6  Taunt.  14. 

(p )  Crowley  v.  Cohen,  8  B.  &  Ad  478,  1  L.  J.  N.  S.  K.  B.  158. 

(q)  De  Forest  v  Fulton  Fire,  1  Hall  (  N,  Y.  Sup.  Ct.)  94,  115,  which  exam- 
ines the  cases  very  fully,  and  states  their  effect  well. 

(>•)  Joj/ce  V.  Swann,  17  C.  B.^N  S.  84,  104. 

(s)  Marks  v.  Hamilton,  7  Ex.  823,  21  L  J.  Ex.  109,  18  L.  T.  260,10  Jur.  152. 
Lingleuv.  Queen  Ins-  Co.,  1  Han.  (New  Bruns.)  280. 

(0  Mayor  of  New  York  v.  Brooklyn  tHre,  Jkc ,  Co.  41  Barb.  (N.  Y.  )  231. 
Sweeney  v.  Franklin  Co  ,  20  Penn  837. 

(u)  Lockhart  v.  Cooper,  42  Am.  Rep.  514. 

Ix)  Waring  v.  Indemnity  Fire  Insurance  Co ,  45  N.  Y.  60fi,  0  Am.  Rep.  146. 

fy)  Reed  v.  Williamsburg  City  Fire  Insurance  Co.,  74  Maine  537. 

(»)  Stevenson  v.  London  and  Lancashire  Assurance  Co.,  26  U.  C.  (Q.  B.)  148. 


63 


*48 


THK  LAWS  OF  INSURANCE. 


w 


'  i    'Ml 


liM 


originally  insured  (a).  Cmtimity  of  interest  tw«€cmary.— And  the 
interest  on  the  pubject-matters  insured  need  not  be  continuous,  since 
absence  of  continuity  only  means  absence  of  risk  (6), 

Lost  or  not  lost.—li  is  no  answer  to  a  claim  on  a  policy  on  goods 
(lost  or  not  lost)  that  the  interest  in  them  was  not  acquired  until  after 

Risk  without  property  will  suffice.  So  mil  probability  of  loss. — Al- 
though risk  and  property  generally  go  together  (d),  they  are  not 
necessarily  associated;  and  the  risk  alone  will  suffice  to  sustain  the 
insurance.  The  peril  must  be  such  that  its  happening  might  bring 
upon  the  assured  a  pecuniary  loss,  but  it  is  sufficient  that  it  might 
bring  a  loss,  and  by  no  means  necessary  that  it  should  certainly 
have  that  consequence  were  it  to  happen  («).. 

Interest  must  be  valuable.— Aa  before  meniioned,  an  insurable  in- 
terest must  be  something  more  than  mere  anxiety  regarding  the 
safety  of  the  thing  insured,  or  hope  of  profit  or  advantage  in 
[*48]  relation  thereto;  it  need  not  amount  to  property  in  the  *thing 
insured,  for  if  through  special  circumstances  the  property 
has  not  passed  to  the  assured,  yet  if  he  has  any  beneficial  right 
which  is  of  a  pecuniary  value  in  the  subject-matter  of  the  insur- 
ance, or  if  it  be  at  his  risk,  he  has  an  interest  which  he  may  validly 
insure  (/).  Stockholders  no  insurable  interest  in  corporate  property. — 
Nevertheless,  the  stockholders  in  a  corporation  have  no  insurable 
interest  in  the  property  of  the  corporation  (g).  General  partner  may 
recover  whole  insurance. — But  if  property  belonging  to  a  limited  part- 
nership, in  which  there  are  a  general  and  a  special  partner,  is  in- 
sured in  the  name  of  the  general  partner,  which  is  the  name  used 
by  the  partnership,  such  general  partner  is  entitled  to  recover  the 
fUll  amount  of  the  loss,  and  not  merely  the  value  of  his  interest  in 
the  property  (h). 

Expectancy — In  the  case  of  an  agreement  to  sell  an  expectancy 
under  a  will  for  so  much  money,  and  to  repay  the  purchase-money 
if  the  expectation  was  not  realized,  the  insured  would  have  no  more 
interest  in  the  life  or  death  of  the  person  from  whom  the  expecta- 
tion arose  than  was  created  by  the  agreement  to  pell;  but  it  has 
been  held  that  he  would  have  an  insurable  interest  (i). 

Perfect  legal  interest  not  n£cessary. — An  insurable  interest  does  not 
mean  a  perfect  legal  interest.     If  it  did,  there  are  some  buildings 

la)  Buttery.  Standard,  4  U.  C.  (App.)  891. 

(b)  Crazier  v.  Phoenix,  2  Han.  (New  Bruna  )  200. 

(c)  Sutherland  v.  Pratt,  11  M.  &  W.  296,  811. 

(d)  Anderson  v.  Morire,  L.  R.  10  C.  P.  at  019,  ner  Blackburn,  J.,  44  L.  J.  C. 
P.  10,  341,  81  L.  T.  N.  S  COS,  83  do.  855,  23  W.  R.  180,  24  do.  80. 

Q  ^^L»hJ  ^PP' ^as.  740,  r?r  Lord  O'Hagan,  40  L.  J.  C.  P.  11,  05  L.  T.  N. 
o.  660,  ^  \V.  n    14. 

(/)  Joi/ce  V.  Swann,  17  C  B.  N.  S.  84. 

iff)  Riggsv  Commercial  Union  Co,  51  N.  Y.  (Sup.  Ct.)  467. 

(A)  Clement  v.  British  American  Co.,  141  Maes.  298. 

(0  Cook  V.  Field,  15  Q.  B.  460,  19  L.  J.  Q.  B.  441,  16  L.  T.  0.  S.  3, 14  Jnr. 

VOX*  ^ 

64 


ILJ!_ 


INSURABLE   INTEREST. 


*60 


on  which  it  would  bo  difficult  for  any  one  as  owner  lo  effect  a  valid 
insurance.  In  the  case  below  cited  (k)  plaintiff  had  contracted  to 
purchase  the  property  insured,  and  Jiad  failed  in  makine  his  pay- 
ment punctually,  but  was  proceeding  in  equity  to  compel  perform- 
ance by  the  vendor,  and  it  was  held  that  he  had  an  insurable  in- 
terest. There  must  be  a  valid  subsisting  contract  capable  of  bein^ 
enforced  between  the  parties  themselves  in  order  to  constitute  an 
insurable  interest  or  right  of  action  against  the  insurer. 

^Interest  in  respect  of  advances  under  parol  agreement  conferring  [  *  49  ] 
equitable  lien. — The  contract,  however,  need  not  be  such  as  to 
pass  the  property  in  the  thing  insured,  nor  need  there  be  such  a 
transmutation  of  possession  as  to  create  a  lien  in  the  legal  technical 
sense  of  that  word.  It  is  sufficient  if  the  relationship  between  the 
parties  is  such  as  to  constitute  an  actual  equitable  interest  in  the 
thing  insured,  and  such  an  equitable  interest  will  constitute  an  in- 
surable interest.  In  a  case  decided  in  the  Supreme  Court  of  Canada 
(0,  C.  made  advances  to  B.  upon  a  vessel  then  in  course  of  con- 
struction, upon  the  faith  of  a  verbal  agreement  with  B.  that  after 
the  vessel  should  be  launched  she  should  be  placed  in  his  hands  for 
sale,  and  that  out  of  the'proceeds  the  advances  so  made  should  be 
paid.  When  the  vessel  was  well  advanced,  C.  disclosed  the  fads 
and  nature  of  his  interest  to  the  agent  of  the  insurance  company, 
and  the  companv  issued  a  policy  of  insurance  against  loss  by  fire 
to  C.  The  vessel  was  still  unfinished  and  in  B.'s  possession  when 
she  was  burned.  It  was  held  on  these  acts  that  C.'s  interest  was  an 
equitable  interest,  which  was  insurable,  and  therefore  C.  woj9  en- 
titled to  recover  (m).  Chambre,  J.  (whose  views  were  ultimately 
adopted  by  the  House  of  Lo'-ds  ),  said,  in  Lucena  v.  Crawford,  3  B. 
&  P.  p.  104 :  **  I  am  not  disposed  to  question  the  authorities  in 
penftral ;  on  the  contrary,  there  appears  to  me  to  have  been  great 
pr(i|  i  ty  in  establishing  the  contract  of  insurance  whenever  the  in- 
terest declared  upon  was,  in  the  common  understanding  of  mankind,  a 
real  ivf-'-eM  in  or  arising  out  of  the  thing  insured,  or  so  connected  with 
it  as  1  Jepend  on  the  safety  of  the  thing  insured,  and  the  risk  in- 
sured against,  without  much  regard  to  technical  distinctions  re- 
specting property,  still,  however,  execluding  mere  speculation  or 
expectation,  and  interests  created  not  otherwise  than  by  gam- 
ing" (w). 

*The  spirit  of  19  Geo.  H.  c.  37,  only  requires  that  the  [*  50] 
policy  shall  not  be  a  gaming  policy  (o).     Quantum  ofinteresL — 
The  question  upon  which  the  validity  of  the  contract  depends  is 
not  the  exact  quantum  of  the  interest  of  the  assured  at  the  time 
the  contract  was  nter^d  into,  but  did  the  defendants  mean  to  game  ? 

(A,)  Milligan  v.  Equitable  dkc,  Co  ,  10  U.  C.  (Q.  B.)  314. 

(I)  Clarke  V.  Scottish  Imperial,  4  Canada  (S.  C.)  192,  and  Johnson  v.  Netf 
Zealand  Co  ,  10  Victoria  L.  R.  154. 

(m)  Ibid. 

(n)  Ebsworthv.  Alliance  Marine  Insurance  Co.,  L.  R.  8  C-  P.  690,  019,  29  L. 
T.  N.  S.479. 

(o)  Page  v.  Fry,  2  B.  &  P.  at  p.  248,  per  Charabre,  J. 

5  PORTEU  ON  INSURANCE.  65 


61* 


THE  LAWS  OF  INSURANCE. 


!  \m\ 


or  was  there  not  a  loss  against  which  they  might  indemnify  them- 
selvea  by  a  policy  of  insurance— not  a  certain,  but  a  possible  loss  ? 
The  case  below  cited  was  one  in  which  the  Court  of  Admiralty 
might  have  decreed  the  assured  to  pay  damages  and  costs,  and  that 
was  held  sufficient  to  give  an  insurable  interest  {p). 

Whoever  has  an  interest  which  the  law  wi'l  recognize  in  the  pre- 
servation of  a  thing,  or  the  continuance  of  a  life,  may  msure  that 

thing  or  that  lif?  (9).  .  ^,    .  n     u 

Any  (meinteresud  in  buildings  may  inmre.— The  insurance  ot  build- 
ings may  be  effected  by  any  one  interested  therein,  and  he  can  re- 
cover to  the  extent  of  the  inj  ury  to  his  interest. 

Fee  simple.  YeaHy,  &c.,  tenante.— The  o^ner  of  the  fee  simple 
may  of  course  insure,  posse3sing  as  he  does  the  largest  possible  in- 
terest. So  may  a  life,  a  yearly,  or  even  a  weekly  tenant  insure  in 
virtue  of  his  jnterest  in  the  property,  and  recover  the  value  of  such 

interest.  Ti.  .  /.    l 

Assured  can  retain  only  value  of  own  tntered. — If  in  any  of  these 

cases  of  limited  ownership  an  insurance  were  eflFected  under  which 
the  limited  owner  recovered  the  full  value  of  the  property,  he  could 
not,  it  seems,  i«tain  such  value  for  his  own  use,  because  the  con- 
tract of  fire  insurance,  like  that  of  marine  insurance,  is  one 
of  indemnity.     In  Castellain  v.  Preston  (r),  Bowen,  L.  J.,  said, 

"  It  is  an  illusion  to  suppose  that  the  assnrird  can  in  any 
[*6:!  ]  case  recover  more  than  his  loss.    We  must* look  at  the 

ordinary  business  rules.  It  is  well  known,  of  course,  that 
a  person  with  a  limited  interest  may  insure,  and  recover  the  whole 
value  of  the  thing  insured,  but  then  his  policy  must  be  a^t  for  the 
purpose,  and  he  must  have  intended  to  so  insure  '.').  A^ain,  a  per- 
son may  insure  for  himself,  or  for  himself  and  adhere,  as  in  the  case 
of  carriers  and  wharfingers,  or  to  take  the  case  of  a  mort|;agee,  he 
is  entitled  to  insure  for  other  parties ;  but  if  he  only  insures  his 
own  interest,  he  can  only  hold  the  damage  to  his  own  interest  That 
principle  applies  here.  It  was  contended  that  a  tenant  from  year 
to  year  may  always  recover  the  full  value  of  the  premises  insured ; 
but,  although  that  contention  would  appear  to  be  supported  by  the 
language  of  Lord  Justice  James  in  Rayner  v.  Preston^  I  cannot  assent 
to  it.  It  may  be  that  the  insurance  companies  do  not  as  a  rule  take 
the  trouble  to  ascertain  the  exact  interest  of  the  assured  because  in 
most  cases  the  insurance  is  for  the  benefit  of  all  concerned ;  but  if 
a  case  were  to  occur  in  which  a  yearly  or  a  wee^cly  tenant  were  to 
insure,  meaning  only  to  cover  his  own  interest,  he  could  not  recover 

and  hold  the  whole  value  of  the  house It  is  true  that  in  most 

cases  the  claim  of  the  tenant  from  year  to  year,  or  for  years,  cannot 
foe  answered  by  handing  over  to  him  what  may  be  the  marketable 


(p)  Boekm  V.  PeZ/,  8  T.  R.  162,  per  Lawrence,  J. 

'q)  DbIIoz.  1868,  pt.  1,  888.     Hranfoni  v.  Saunders,  2S  W.  R.  660 


i 


(r)  11  Q.  6.  D.  880,  R'i  L.  J.  Q.  B.'866,  40  L.  T.  N.^:20,  sf,  wru.  m. 
(f)  Joknaon  v  New  Zealand,  <tc ,  Co.,  10  Victoria  L.  R  164.    Howes  v.  Do- 
wtinion  Fire  Co..  8  Ontario  ( App. )  044. 

66 


on 


(«) 

(!f) 

u.  c. 

(») 
(")  . 

(8rd  seJ 

(A) 

w 


INSURABLE  INTEREST. 


*53 


value  of  his  property,  and  the  reason  is  that  he  insures  more  than 
the  marketable  value  of  his  property,  and  he  loses  more  than  the 
marketable  value  of  his  property ;  he  loses  the  house  in  which  he 
is  living,  and  the  beneficial  enjoy^ient  of  the  house,  as  well  as  its 

pecuniaiy  value A  man  cannot  be  compensated 

simply  by  paying  him  the  marketable  value  of  his  interest. 
But  it  does  not  follow  that  he  gets  or  can  keep  more  than  he  has 
lost "  (0. 

*Joipi-tenarU8. — A  joinirtenant  or  a  tenant  in  common  has  [*52] 
such  an  interest  in  the  entirety  as  will  entitle  him  to  insure 
the  whole  («). 

Husband  in  property  to  wife'a  separate  vse. — A  husband  has  an  in- 
surable interest  in  property  settled  t6  his  wife's  separate  use,  they 
residing  togetJier  and  sharing  in  the  use  of  the  property  (x). 

An  appurtenant  to  freehold  must  be  recovered  for  as  such. — A  build- 
ing insured  as  appurtenant  to  the  freehold  can  only  be  recovered 
for  as  such.  Therefore  when  in  such  a  case  the  assured's  title  to 
the  freehold  has  failed,  he  cannot  maintain  a  claim  in  respect  of 
such  a  building  on  the  ground  of  its  being  moveable  property,  and 
so  distinct  from  the  freehold  (2^). 

RenL — Tenants  have  an  insurable  interest  in  the  rent  which 
they  are  liable  to  continue  paying  after  the  premises  are  destroyed 
by  fire  (z).  But  if  the  contract  of  tenancy  relieves  them  from 
liability  they  will  not  have  an  insurable  interest  In  Scotland, 
where,  if  the  premises  are  destroyed  or  rendered  useless  for  the 

Eurpose  for  which  he  took  them,  the  tenant  can  surrender  them, 
e  consequently  has  no  insurable  interest  in  his  rent  (a). 
Bailees. — ^A  common  carrier,  pawnbroker,  factor,  broker  f  nd  wharf- 
inger have  an  insurable  interest  in  iv  3  goods  entrusted  to  them ; 
but  if  they  insure  the  goods  to  their  fr  il  value  and  receive  it,  they 
wi]l,  after  satisfying  their  own  claims,  be  trustees  of  the  balance  for 
the  real  owners  (b), 

♦And  in  the  recent  case  of  CasteUain  v.  PresUm  (c)  Bowen,  [*53  ] 
L.  J.,  said:  "It  is  well  known  in  marine  and  fire  insurance, 
that  a  person  who  has  a  limited  interest  may  insure,  nevertheless 
on  the  total  vplue  of  the  subject-matter  of  the  insurance,  and  he 
may  recover  the  whole  value,  subject  to  these  two  provisions — 1st, 
the  form  of  his  policy  must  be  such  as  to  enable  him  to  recover  the 


i: 


(()  Cagtellain  v.  Preaton,  11  Q.  B.  D.  400,  401,  per  Bowen,  L.  J.,  49  L.  T. 
N.  S.  21),  63  L.  J.  Q.  B.  aaO,  81  W.  R.  657.  ^ 

m)  Page  v.  Fry,  2  B.  &  P.  240.     Inglis  v.  Stock,  10  App.  Cbs.  274. 
«)  GouUton  V.  Royal,  1  F.  &  P.  270. 

(y)  Shtrbonneau  t.  Beaver  Mutual  Fire  Insurance  Co.,  88  U.  C.  (Q.  B.)  1,  80 
U.  C.  (Q.  B.)472. 

(•)  Manhall  v.  SchqfUld,  47  L.  T.  N.  S  406,  81  W.  R.  184,  52  L.  J.  Q.  B.  68. 

(»)  AlUn  V.  Markiand,  20  Sc.  Lar  Rep.  267.    Duff  v.  Fleming,  8  C.  S  G. 
(8rd  serieR)  709 

(ft)  Sidawayit  v.  Todd,  2  Stark.  400.  Armitage  v.  Winterbottom,  1  M.  &  0. 180. 

(0)  Caatellain  v.  IVetton,  11  Q.  B.  D.  898,  and  vid'  supra,  p.  50. 

67 


54* 


THE  LAWS  OF  INSURANCE. 


■M 


total  value ;  and  2nd,  he  must  intend  to  insure  the  whole  value  at 
'^cS^.  C<md^eintrust.^The  quefonh^oitenh^^^ 
cussed  whether  factors  or  consignees  for  sale  have  an  "^hed 
aXority  to  insure  for  their  principle:  and  there  seems  no  (fou^^ 
that  they  may  insure  upon  tfieir  own  account  to  the  extent  of  their 
own  Sest  (d).  They  may  insure  both  for  themselves  and  for 
?hdr  prind^^^^^^^^^  are  Lt  positively  bound  to  insure  unless  they 
have  Jeceived  instructions  to  do  so,  or  have  promised  to  insure  or 
the  usages  of  trade  or  the  habit  of  deahng  between  theni  and  their 
principals  raises  an  implied  obligation  to  insure  (e).  Consignees 
having  a  power  to  sell,  manage,  and  dispose  of  the  property  sub- 
iect  to  the  rights  of  the  consignor,  and  even  consignees  with  a  mere 
naked  right  to  possession,  may  insure  if  they  state  the  interest  tO  be 
in  their  principal  (/).  .         .        .      .    u- 

But  it  18  doubtful  whether  a  consignee  insuring  m  his  own  name 
could  in  case  of  loss  recover  the  whole  value  of  tlie  property  from 
the  underwriter  and  hold  the  surplus  beyond  his  own  advances 

upon  trust  for  the  benefit  of  his  principals  (g). 
[*  54]      *If,  however,  consignees  did  insure  in  their  own  names  to 
the  full  value  of  the  property,  the  consignors  might  even 
after  loss  ratify  the  insurance,  which  would  then  enure  for  their 
benefit  (A).  . 

Cormgnee  in  trust. — A  creditor  has  an  insurable  interest  in  goods 
voluntarily  consigned  by  his  debtor  to  a  third  person  in  trust  for 
such  creditor  (t). 

The  firm  of  De  la  Torre  in  Spain  consigned  goods  to  Dubois  & 
Son  in  London,  and  endorsed  the  bill  ot  lading  to  them,  accom- 
panied by  a  letter  directing  them  to  note  the  goods  for  certain 
creditors  of  De  la  Torre.  It  was  held  that  Dubois  &  Son  were  to 
be  considered  as  trustees  for  the  creditors  from  the  time  the  goods 
were  put  on  board  the  ship,  and  that  the  creditors  had  an  insurable 
interest  in  the  goods  (k). 

Merchant  ana  consignee. — A  merchant  abroad,  having  effects  in  the 


m 


ki 


(d)  Ebsworth  v.  Alliance,  Ac,  L.  R.  8  C  P.  596,  ao  L.  T.  N.  S.  470.  . 

(e)  Ebsworth  v.  Alliance,  supra.  Silverthome  v.  Gillespie,  d  U.  C.  (Q.  B.) 
414.  Gooderham  v.  Marlett,  14  U.  C.  (Q.  B.)  228.  Wolfe  v.  Itormastle,  1  B.  & 
P.  816,  Story  Agency,  8.111  Conway  v.  Gray,  10 East 586.  Robertaony.  Ham- 
ilton. 14  Kast  522.  Knox  v.  Wood,  1  Camp.  648.  F'cgano  w.'Long,  4  B.  &  C. 
219.    Neale  v.  Heed,  1  B.  &  C  657. 

(/)  Lucenav.  Crawford,  2  B.  &  P.  N.  II.  824,  per  Lord  Eldon,  1  Taunt.  825. 
CaateUain  v.  Preaton,  11  Q.  B.  D.  898  Ebsworth  Alliance,  L.  R.  8  C.  P.  at  628, 
29  L.  T.  N.  8.  479,  «M»ra. 

(a)  Ebsworth  v.  Alliance,  and  vide  supra,  p.  50.  Castellain  v.  Preston,  L.  R. 
11  Q.  B.  D.  898,  per  Bowen,  L.  J. 

(h)  Giffard  v.  The  Queen  tfcc.,  Co.,  1  Hannay  (New  Brunswick)  433,  489. 
Williams  v.  North  China  Co.,  1  C  P.  D.  757,  85  L.  T.  N.  8.  884.  Hagedom  v. 
Oliverson.  2  M.  &  8.  486. 

(t)  Hilly.  Secretan,  1  B.  &  P.  816. 

(*)  Ibid, 

68 


'fir 


INSURABLE  INTEREST. 


*.n 


56 


hands  of  his  correspondents  here,  may  compel  them  to  procure  an 
insurance  for  him,  or  hand  over  the  effects  [l). 

If  a  merchant  here  has  been  accustomed  to  procure  insurances 
here  for  his  correspondent  abroad  in  the  usual  course  of  business, 
the  latter  has  a  right  to  expect  his  orders  for  insurances  to  be  obeyed, 
unless  the  former  give  notice  to  discontinue  the  course  of  deal- 
ing (I). 

If  bills  of  lading  are  sent  with  directions  to  insure,  they  cannot 
be  accepted  without  obeying  the  order  to  insure.    Limiting 
the  broker  to  too  smnll  a  *premium,  so  that  he  cannot  get  [*55] 
a  policy,  amounts  to  disobeclience  (m). 

if  goods  sent  are  mortgaged,  and  a  direction  to  insun  jccom- 
pany  the  bill  of  lading  and  be  not  obeyed,  foreclosure  of  the  mort- 
gage before  receipt  of  the  bill  of  lading  will  not  alter  the  force  of 
the  direction  (m). 

Agent  inmring  consignee. — A  person  insuruig  as  agent  for  another 
cannot  recover  as  a  principle  on  the  policy.  So  a  consignee  suing 
for  indemnity  on  a  policy  effected  in  his  own  name  on  another's 
goods  consigned  to  him  must  show  an  insurable  interest  in  such 

f;oods,  and  can  only  recover  so  far  as  he  bus  interest  (n).    If  he  has  a 
ien  on  the,  special  goods,  he  can  recover  to  the  extent  thereof. 

If  the  goods  are  not  at  the  risk  of  the  consignee  or  purchaser 
until  a  certain  event,  he  has  no  insurable  interest  in  them  until  that 
event  has  happened  (o) ;  but  in  Hagedom  v.  Oliverson^  2  M.  <&  S. 
485,  the  ship  of  the  assured  was  held  to  be  at  risk,  though  he  did 
not  confirm  the  insurance  thereof  till  after  the  loss. 

Stoppage  in  transitu. — Where  a  sale  takes  place  the  vendee's  title 
is  liable  to  be  defeated  by  the  vendor's  right  to  stop  in  transitu  (p): 
and  if  that  right  ia  exercised,  the  ver  'j!<^  ceases  from  the  time  of 
its  exercise  to  have  any  insurable  incerest  in  the  goods,  which 
therefrom  ceafie  to  be  at  iiis  risk  (q). 

Bailee. — If  a  bailee  have  no  lien  and  no  responsibility  for 
the  ^afe  custody  of  the  goods  entrusted  to  him,  he  hag  no  [*56] 
insurable  interest  in  himself,  and  can  only  insure  on  account 
of  the  persons  interested,  who  may  ratify  such  a  contract ;  and  it 
would  seem  that  he  can  recover  the  full  value  of  the  property  in- 
sured as  trustee  for  the  true  owners  (r)  though  the  latter  were  una- 

(7)  Smith  V.  Lascelles,  2  T.  R.  180,  y,   -  Duller,  J. 

(m)  Smith  v.  LasceUes,  2  T.  R.  189,  pc  BuUer,  J. 

(m^  Ctisack  V.  Mutual  Imtuj-ance  Co  ,  0  Lr,  Can.  Jur.  97.  Ctutellain  v.  Pres- 
ton, 11  Q.  B.  D.  880,  52  L.  J.  Q.  B.  860,  49  L.  T.  N.  8.  29,  31  W.  R.  567. 

(o)  Anderson  v.  Morice,  4  App.  Ca«.  742,  40  L.  J.  C.  P.  14,  85  L.  T.  N.  8. 
650,  25  W.  R.  14.  See  also  Lucena  v.  Crawford,  2  B.  &.  P.  N.  R.  269, 1  Taunt. 
825,  per  hprd  Eldon. 

[p)  As  to  the  nature  and  conditionH  of  tliu  exorcititi  of  this  right,  tiee  Kew^all 
V.  StenensSs  Co.,  11  Q.  B.  I).  856. 

{q)  Clay  V.  Harrison,  10  B.  &  C.  09. 

(r)  North  British  and  Mercantile  v.  Moffatt.  L.  R.  7  C.  P.  25,  41  L.  J.  C,  P. 
1,  diBcuBsing  previously  cited  case,  20  W.  R.  114,  20  L.  T.  N.  8.  662. 

69 


*57 


THE  LAWS  OF  INSURANCE. 


ware  of  the  insurance  («).  If  he  has  not  popsest^ion,  his  lien  has 
not  arisen  or  is  lost  (<)•  Lord  Eldon  said,  in  Lucena  v.  Crawford,  2 
N.  R.  324:  "I  cannot  agree  to  the  doctrine  that  an  agent  may  in- 
sure in  respect  of  his  lien  to  arise  upon  a  8ub?equent  performance 
of  his  contract  If  he  has  a  lien,  he  can  insure  the  property  in 
respect  of  it  {u\  as  in  the  case  of  a  repairer  of  a  foreign  ship  "  (x). 
A  carrier  has  an  insurable  interest — 

A  earner  has  an  insur^le  interest. — (i.)  In  respect  of  his  respons- 
ibility to  the  extent  to  which  he  is  responsible  ut  common  law  (y), 
or  under  the  Carriers  Acts  (2),  or  his  own  special  contract  (a), 
wh'.ch  responsibility  lasts  during  transit,  and  for  a  reasonable  time 
thereafter  before  delivery  or  awaiting  deliverer  (b).  Thereafter  he 
is  only  an  ordinary  bailee  (c),  and  not,  as  he  is  commonly  called, 
an  insurer. 

(ii.)  In  respect  of  his  lien  on  the  goods  for  his  charges  (d). 
[*  57]      *(iii)  In  respect  of  his  possession,  which  will  enable  him 
to  insure  the  whole  value  and  recover  it,  subject  to  the  rights 
of  the  owner  to  claim  the  benefit  of  his  policy  (e). 

Carriers  entitled  to  recover  fail  value. — Where  carriers  insured 
against  fire  "goods  their  own  and  in  trust  as  carriers,"  and  one  of 
the  conditions  of  the  policy  was  that  "goods  held  in  trust  or  on 
commission  are  to  bo  insured  as  such,  otherwise  the  policy  will  not 
extend  to  cover  such  property,"  it  was  held  that  the  plaintiffs  were 
entitled  to  recover  the  full  value  of  all  goods,  and  that  they  might 
be  considered  as  having  insured  the  goods  which  they  held  in  trust 
as  carriers  for  the  benefit  of  the  owners,  for  whom  they  would  hold 
the  amount  recovered  as  trustees,  after  deducting  what  was  due  in 
respect  of  their  own  charges  upon  the  goods  (/). 

In  America  an  action  has  been  allowed  by  the  owner  of  goods 
deposited  with  a  forwarding  agent  to  recover  a  proportionate  part 
of  an  insurance  effected  by  the  latter  on  merchandise  generally  held 
in  trust  or  on  commission  (g). 


(t)  Ibid.    See  also  1  Phillips  179. 

(x)  1  Phillips  179. 

(1/)  Forward  v.  Pittard,  1  T.  R.  27. 

jjLff &*r«  riTir  """""'■  '^'""■»"««.»  Bins.  2.2.  c^ 

(*)  Ciiffga  V.  Bernard,  2  Raym.  900. 

iM!ilTi°ylVm:Z:iTr.'lS"°''  ''"■•  '•  °<^'  ""•  "•  *'•* "» •- 

(g)  Hitter  v.  Morrit,  18  Penn.  218. 

70 


£ 


INSURABLE   INTEREST. 


*59 


Wharfinger. —  \  wharfinger  is  not  at  common  law  responsible  for 
goodd  which  are  casually  burnt  on  the  premises  (A),  but  sometimes 
a  wharfinger  or  other  bailee  is  liable  to  indemnity  for  fire  by  cus- 
tom (0-  When,  however,  no  duty  to  indemnify  or  to  insure  is  im- 
posed upon  the  wharfinger  or  his  i^m,  and  there  is  no  evidence  that 
the  insurance  was  made  on  the  property  or  in  the  interest  of  the 
owner  of  ^e  deposited  goods,  an  msurance  by  one  partner  will  not 
be  taken  to  have  been  made  in  the  course  of  the  firm^s  busi- 
ness, nor  will  *the  owner  of  the  goods  be  allowed  to  recover  [*  58} 
from  one  partner  the  proceeds  of  a  policy  received  by  an- 
otiier  (k). 

Where  a  wharfinger  insures  goods  as  ''  in  trust  or  on  commission 
for  which  he  is  responsible,''  goods  deposited  with  him  and  sold  by 
the  importer,  and  lor  which  the  wharfinger  has  given  delivery  war- 
rants, cease  to  be  at  his  risk,  and  he  has  no  insurable  interest  therein 
after  the  date  of  such  warrant  (0- 

Wharfingers^  &c, — \Vharfingers,  warehousemen,  and  commission 
agents,  having  goods  in  their  premises,  may  insure  them  in  their 
own  names,  and  in  case  of  loss  may  recover  the  full  amount  of  in- 
surance for  the  satisfaction  of  their  own  claims  first,  and  hold  the 
residue  for  the  owner  (m). 

Such  insurance  is  not  unusual,  even  when  not  ordered  by  the 
owners  (n) ;  and,  when  made,  it  enures  to  their  benefit. 

Factor's  irUeresL — ^As  to  factor's  interest  in  goods  entrusted  to  him, 
see  the  Factor's  Act  (5  &  6  Vict.  c.  89). 

Commission  agent. — A  commission  agent  is  to  all  the  world  but 
his  principal  for  all  intents  and  purposes  the  owner  of  the  goods, 
and  in  an  insurance  in  his  own  name  on  the  goods,  if  the  policy 
was  so  intended,  he  can  recover  the  tuU  damage,  and  not  merely 
the  amount  of  advances  on  the  goods,  with  interest,  and  their  mer- 
cantile commission  and  charges  as  factors  (o). 

*  Agent  to  obtain  advances. — And  an  agent  to  obtain  ad-  [*59] 
vances  for  his  principal  on  goods,  if  be  render  himself  liable 
for  any  loss  which  may  arise  after  th  3ir  sale,  has  an  insurable  in- 
terest therein  to  the  full  amount  of  the  loan  (p). 


(h)  Sidawaya  v.  Todd,  2  Stark,  401. 

U)  North  Jiritish  and  Mcrcnntile  v.  London^  Liverpool,  and  Globe  Co.,  5  Gh< 
D.  509,  46  L.  J.  Ch.  C37,  80  L.  T.  N.  S.  G29. 
(k)  Armitaqe  v.  Wintcrbottom,  1  M.  &  O.  180. 
(l)  North  iiritiah  and  Mercantile  v.  Moffatt,  41  L.  J.  C.  P.  1,  L.  R  7  C.  P. 


25,  25  L.  T.  N.  8.  662,  20  W.  R.  114.    Lockhart  v.  Cooper,  42  Am.  Rep.  514. 

im)  Armitage  v.  ^interbottom,  1  M.  &  O.  130.  Waters  \.  Monarch  Co.,  fi  E. 
I.  870,  25  L.  J.  Q.  B.  102,  20  L.  T.  217,  4  W.  R.  246,  2  Jur.  N.  8.  875.  Lon- 
don and  North-Western  Railway  v.  Glyn.  1  E.  &  E.  062,  28  L.  J.  Q.  H.  188,  7 
W.  R.  288,  88  L.  T.  190.  De  Foreat  v.  FuUon  Fire,  1  N.  Y.  Sup.  Ct.  (Hall)  04, 
180,  136.     Sitter  v  .Morra,  13  Poiin.  St.  219. 

(h)  Home  Insurance  Co.  v.  Baltimore  Warehouse  Co.,  0  Otto  (98  U.  3.)  627, 
643. 
lo)  De  Forest  v.  Fulton  Co.,  1  N.  Y.  Sup.  Ct.  (Hall)  94. 
(p)  0^ Connor  v.  Imperial,  14  Lr.  Can.  Jur.  219. 

71 


*60 


THE  LAWS  OF  LVSUBAN'CE. 


i!         :' 
I 


i 


i 


1 


policies  ate  sometimes  issued  to  factors  or  to  warehousemen  in- 
tended only  to  cover  margins  uninsured  by  other  policies,  or  to. 
cover  nothing  more  than  the  limited  interest  which  the  factor  or 
warehouseman  may  have  in  the  property  which  he  has  in  charge. 
It  will  make  no  diflference  if  the  factors  or  parties  are  a  company 
forbidden  by  their  charter  to  insure  the  goods,  which  only  prevents 
them  taking  risk  by  the  bailment  (q).  ^ 

Meaning  of*^  in  trust.'*— GoodB  the  assured 's  own,  and  "in  trust 
or  on  comnission,"  were  insured  by  a  policy  against  fire,  the  as- 
sured being  a  wharfinger  and  warehouseman  who  had  in  his  ware- 
house goods  belonging  to  his  customers,  which  was  deposited  with 
him  in  that  cap:ioity,  and  on  which  he  had  a  lien  for  his  charges 
for  cartage  and  warehouse  rent,  but  no  further  interest  of  his  own. 
No  charge  was  made  to  his  customers  for  insurance,  nor  were  they 
informed  of  the  exii^tence  of  his  policy.  The  plaintiffs  warehouse 
was  burnt,  with  all  the  goods  in  it,  and  the  company  paid  the  value 
of  hiij  own  goods  and  the  amount  of  his  lien  on  his  customers'  goods, 
but  refused  to  pay  the  amount  of  the  customers'  interest  in  the 
goods  beyond  tne  lien.  The  Court,  however,  decided  that  the  goods 
of  the  customers  were  in  trust  within  the.  meaning  of  the  policy, 
and  that  assured  was  entitled  to  recover  the  entire  value,  and  would 
be  entitled  to  apply  so  much  to  cover  his  own  interest,  and  would 
be  trustee  for  the  owners  as  to  the  rest.  In  giving  judgment,  Lord 
Campbell,  C.  J.,  said :  "  What  is  meant  in  these  policies  by 
[*60  ]  goods  in  trust?  I  think  it  *niean8  goods  with  which  the  as- 
sured were  entrusted,  not  goods  held  in  trust  in  the  strict 
technical  sense  "  (r). 

Oooda  "  in  trust." — If  a  policy  contains  the  condition  that  goods 
held  in  trust  must  be  insured  as  such,  otherwise  the  policy  will 
not  cover  them,  the  following  test  may  be  applied  to  determine 
whether  the  goods  are  held  in  trust  and  come  within  the  condition. 
If  there  is  reserved  to  the  bailor  the  right  to  claim  a  re-delivery  of 
tho  property  deposited,  the  bailment  is  generally  withinl  the  condi- 
tion and  the  property  held  on  trust.  But  where  there  is  a  delivery 
of  property  on  a  contract  for  an  equivalent  in  money  or  some  other 
valuable  commodity,  and  not  for  u  return  of  the  identical  subject- 
matter  in  its  original  or  an  altered  form,  this  is  a  transfer  of  the 
property  for  value,  and  not  a  delivery  in  truit  («). 

Inntrer'a  liability  limited  to  that  of  aa8ured.—''QoodB  thS  assured's 

own  in  trust  or  on  commission  for  which  they  are  responsible  " 

were  insured  by  a  policy  against  fire.    The  goods  were  destroyed 

by  fire,  and  the  question  whether  they  were  covered  by  the  policy 

Blanket  and  floating  polidea  by  «pecfaroum«r«.— Blanket  and  floating 

(q)  Home  Lmtranct  Co.  v.  Baltimore  Warehnm  Co.,  8  Otto  (03  U.  8  )  527, 


(r)  Donaldson  \  Maneh«ater  Ins.,  14  C.  S.  C.  ( Ist  series )  COl.  Waters  v. 
Monarch,  .f;c.,  5  E  &  B.  870.  25  L.  J.  Q.  B  102,  fO  L.  T.  217,  4  W.  R.  245. 

(f)  SnHth  Atutralian  v.  Jiandell,  L  R.  8  P.  C  101,  22  L.  T.  N.  8.  843,  0 
Moore  P.  C.  N.  8.  841.    Baxter  v.  Har{furd  Co.,  11  Bissell  (U.  8.)  800. 

72 


INSURABLE  IXTEHEST. 


*62 


came  before  the  Court  for  determination.  In  giving  the  judgment 
of  the  Court,  Keating,  J.,  after  referring  to  the  form  of  the  policies 
in  the  cases  of  Waters  v.  Monarchy  &c.^  Co.,  (t)  and  L.  &  N.-  W.  Go.  v. 
Glyn  (w),  said :  "  It  will  be  observed  that  the  wording  in  the  pres- 
ent policy  is  essentially  different,  for  whilst  in  the  cases  referred  to 
the  insurance  extended  to  goods  *  in  trust  or  on  commission  gener- 
allv,'  in  the  present  case  it  is  expressly  limited  to  *  goods  in  trust 
or  on  commission,  for  which  they  (the  assured)  are.  responsible.' 
In  L.  <fc  N.-W.  R.  Co.  v.  Glenn,  Erie  jmd  Hill  JJ.,  had  thrown  out 
thatif  insurance  companies  wished  in  future  to  limit  their 
responsibility  to  the  *responsibility  of  the  assured,  they  [*61] 
must  employ  express  words  to  that  effect.  It  seems  to  us 
that  the  present  plaintiffs  (flie  insurance  company)  have  done  so 
in  this  policy,  and  have  expressly  limited  their  liability  to  such 
goods  as  were  held  in  trust  by  the  assured  and  for  which  they  were 
responsible.  It  follows  that  the  goods  in  question  for  which  the 
assured  iveie  not  responsible  were  not  covered  by  the  policy,  and 
consequently  that  the  insurance  company  are  entitled  to  the  judg- 
ment of  the  court"  (a;). 

Where  deposit  of  goods  amounts  to  a  sale,  they  are  not  held  in  tiiMt. — 
Where  corn  was  deposited  by  farmers  with  a  miller  to  be  stored  and 
used  by  the  miller  as  part  of  the  ordinary  slock  of  his  trade,  and 
was  by  him  mixed  with  other  com  deposited  with  him  for  a  simi- 
lar purpose,  the  farmers  having  the  option  of  claiming  at  any  time 
an  equal  quantity  of  wheat  of  the  like  quality  or  its  value  in  cash, 
it  was  held  that  the  transaction  was  virtually  a  sale  and  not  a  bail- 
ment by  the  farmers  to  the  miller,  and  that  thei*efore  the  miller  could 
claim  under  a  policy  of  insurance  as  for  his  own  property,  and  that 
it  was  not  necessary  to  be  described  as  goods  held  in  trust  (y). 

Goods  with  venders  at  buyers^  risk. — Where  goods  remaining  with 
the  vendors  at  the  buyers' risk,  by  agreement  between  them  and 
their  customers,  were  burnt,  and  at  the  time  of  the  fire  the  vendors 
had  floating  policies  of  insurance  which  covered  "  goods  on  the 
premises,  sold  and  paid  for  but  not  removed,"  but  they  had  no  un- 
derstanding^ with  tneir  customers  as  to  any  insurance,  and  the 
amount  of  insurance-money  which  the  venders  received  from  the 
insurance  company  was  not  BufRcient  to  cover  the  loss  of  their  own 
goods  exclusive  of  the  goods  sold,  it  was  held  that,  as  there  was  no 
contract  befWeen  the  vendors  and  their  customers  as  to  in- 
surance, the  ""vendors  were  under  no  obligation  in  the  matter,  [*62] 
and  were  entitled  to  appropriate  to  their  own  losses  the  whole 
sum  received  from  the  insurance  office  (z). 

(t)  5  E.  &  B.  870,  25  L.  T.  Q.  B.  102,  26  L.  T.  217,  4  W.  R.  245. 

(u)  28  L.  J.  Q.  B.  188,  1  E.  &  E.  652  88  L.  T.  10ft,  7  W.  R.  238. 

(«)  North  British  and  Mercantile,  <tc.,  Co.,  v.  Moffatt,  25  L.  T.  N.  S.  662,  L. 
R.  7  C.  P.  25,  41  L.  J.  N.  8.  C  P.  1,  20  W  R.  114. 

(y)  South  Australian  Co.  v.  Randell,  L.  R.  8  P.  C  101,  0  Mooro  P.  C.  N.  S. 
841,  22  L.  T.  N.  8.  848.     Todd  v.  Liverpool,  A-c,  18  U.  C.  (C.  P  )  102. 

(z)  DalgHsh  v.  Buchanan,  16  C.  8.  Cf.  (2nd  series  832.  Martinmu  v.  Kitoh* 
ing,  L.  R.  7  Q.  B.  486,  41  L.  J.  Q.  B.  2:^7,  26  L.  T.  K.  8.  886,  20  W.  R.  769. 

78. 


63- 


THE  LAWS  OF  INSURANCE. 


iifii 


It  I 


Assured  may  Juive  insurable  interest  in  goods  not  separated  from  bulk^ 
hut  which  are  at  his  risk— TYiQ  purchaser  of  barrels  of  oil  not  yet 
actually  identified  and  separated  from  other  barrels  of  oil  stored  in 
the  same  place  has  been  held  in  Canada  to  have  an  insurable  in- 
terest as  owner  of  bo  many  barrels  Jis  he  insured  (a),  on  proof  that, 
at  the  time  of  getting  the  warehouse  receipt  and  of  the  fire,  goods 
to  the  amount  of  the  brand  named  in  the  receipt  were  in  store  (6). 
kM  in  this  country  the  purchasers  of  goods  will  have  an  insurable 
interest  therein  if  they  are  at  his  risk,  even  though  they  have  not 
been  specifically  appropriated  to  him  prior  to  the  loss  (c). 

Insurable  inierest  without  liability  to  pay. — A  man  may  even  have 
an  insurable  interest  in  goods  for  which  he  has  neither  paid  nor  be- 
come liable  to  pay  (d). 

Where  liability  to  pay  tliere  insurable  interest.  LiabUity  to  loss  is  in- 
gurable  interest.  Undivided  inttrest. — A  person  certainly  has  an  in- 
surable interest  in  goods  if  he  is  liable  to  pay  for  them,  whether  he 
has  the  property  in  them  or  not.  And»in  the  case  of  Inglis  v.  Stock 
in  the  House  of  Lords,  which  decides  this  proposition.  Lord  Black- 
burn says, "  In  order  to  recover  against  the  underwriter,  the  assured . 
must  show  that  he  suffers  loss  in  respect  of  the  thing  insured  "  («). 
And  in  the  same  case  the  same  learned  lord  held  that  an  undivided 
interest  in  a  parcel  of  goods  constitutes  an  insurable  interest  just  as 
much  as  if  it  were  an  interest  in  every  portion  of  the  goods  (f). 
And  Lord  Esher,  M.  R.,  when  the  same  case  was  before  the 
[*63]  Court  of  *Appeals,  said,  "It  is  the  duty  of  a  Court  always 
to  lean  in  favour  of  an  insurable  interest,  if  possible,  for  after 
underwriters  hav^  received  the  premium,  the  objection  that  there 
was  no  insurable  interest  is  often  as  nearly  as  possible  a  technical 
objection,  and  one  who  has  no  real  merit  as  between  the  assured  and 
insurer ''  (/).  And  the  insurers  have  no  right  to  call  on  the  assured 
to  exercise  a  possible  option  to  be  released  from  the  contract  under 
which  the  insur  ible  interest  arises  (jg). 

Manufacturer. — A  person  who  has  contracted  to  make  an  insura- 
ble thing  for  another  has  an  insurable  interest  therein  until  it  is 
complete  or  passes  to  the  person  to  whose  order  it  is  made,  since 
he  cannot  get  paid  till  it  is  completed,  in  the  absence  of  special 
stipulations  (h).    Thus  where  there  was  contract  to  put  machinery 


9 

(a)  Matthewson  v.  Jioyal  Insurance  Co.,  10  Lr.  Can.  Jur.  45.  Clark  v.  West- 
m»,  25  U.  C.  (Q.  B.)209. 

(6)  WiLiony.  Citizens,  Ic.,  Co.,  19  Lr.  Can.  Jur.  175.  Stanton  v.  Etna.  17 
Lr.  Can.  Jur.  281.  ' 

(c)  Inglis  v.  Stock,  10  App.  Cas.  263. 

id)  Colon:  f  Ins.  Co,  v.  Adelaide  Marine  Co.,  12  App.  Caa.  138. 

(«)  Ingli*  V.  Stock,  10  App.  Cas.  270,  54  L.  J.  Q.  B.  682,  52  L.  T.  821.  38  W. 
B.  877.  ' 

(/)  10  App.  Cas.  274.     See  also,  as  to  an  undividetl  interest,   Grandin  v.  iJo. 
Chester  Co-,  107  Penn.  26. 
(/)  Stock  V  Inglis,  12  Q.  B.  D.  671,  63  L.  J.  Q.  B.  358,  61  L.  T.  440. 
(ff)  Inglis  V.  Stock,  10  App.  Cas.  274. 
(A)  See  Grant  v.  Parkinson  Insuranie,  3  B.  &  P.  86  note. 

.74 


y.Ho 
1  Tai 
retan, 
L.T. 

Ct.)2 
(m 
Jn) 
N.  S 
N.S. 

Co. 
(P 


INSURABLE  INTEREST. 


*64 


on  defendant's  premises  and  keep  it  in  repair  for  two  years,  the 
price  being  payable  on  completion,  but  before  completion  (i)  an 
accidental  fire  destroyed  the  machinery,  the  plaintifls  were  held 
not  entiUed  to  recover  for  the  work  they  had  done  ( j  ). 

Legal  or  equitable  interesta  sufficient. — A  bona  fide  eq[uitable  interest 
in  property,  the  legal  title  whereto  appears  to  be  in  another,  may 
be  insured.  So  may  also  the  legal  interest  be  insured,  for  the  in- 
terest both  of  a  trustee  and  of  bis  cestui  que  trust  is  an  insurable 
one  (k). 

Beneficial  owner — sole  otmer. — If  the  beneficial  title  is  in- 
sured, the  fact  that  the  legal  ^estate  is  outstanding  in  another  [*64] 
will  not  vitiate  a  policv  requiring  that  the  assured  should  be 
entire,  unqualified  and  sole  owner  for  his  own  use  and  benefit  (I). 

Equitabu  interest. — And  where  the  plaintiff  had  mortgaged  his  in- 
terest in  the  goods  and  freight  to  the  defendant,  the  defendant 
might  have  insured  the  legal  interest  on  his  own  account ;  and  he 
might  also  have  insured  the  equitable  interest  remaining  in  the 
plaintiff  on  the  plaintiff's  account  (m). 

Purchaser. — A  purchaser  of  realitv  has  also  an  insurable  interest 
in  the  premises  purchased  fi'om  tne  signing  of  the  contract,  and 
before  completion,  since  he  has  the  whole  equitable  estate  therein, 
and  the  property  is  at  his  risk ;  and  if  it  is  burned  down,  he  must 
still  pay  for  it  (w).  Purchaser's  interest. — This  interest  exists  equally 
though  the  purchaser  is  suing  for  specific  performance  (o),  or  for 
rescission  of  the  contract,  or  has  not  found  his  purchase-money  or 
any  part  thereof.  Circumstances  may  arise  to  defeat  his  title  to 
recover  on  his  policy,  such  as  failure  to  obtain  specific  perform- 
ance, or  decree  to  rescind  the  contract  of  sale  (^  ).  Unpaid  vendor. 
— An  unpaid  vendor  of  property  who  is  still  in  possession  has  an 
insurable  interest,  and  may  recover  under  a  policy  of  firo  insur- 
ance ;  for  until  he  is  paid  he  cannot  tell  for  certain  whether  be  will 
ultimately  get  his  purchase-money  or  not.    If  he  were  not  allowed 

(i)  American  law  hereon  in  May  Ins.  116. 

Ij )  Appleby  V.  Ml/era,  L.  R.  2  C.  P.  651.  Claparf,de  v.  Commercial  Union, 
Feb.  1884,  Q.  B. 

(k)  London  and  North-  Western  Railway  v.  Glyn,  1  E.  &  E.  662,  1  Jur.  N.  S. 
1004,  28  L.  J.  Q.  n.  1 88,  83  L.  T.  1 09,  7  W.  K.  238.  Ex  parte,  Houghton,  1 7  Ves. 
253  Ex  parte,  laKop,  16 Ves.  67.  Camden  \.  Anderson.  6  T.R.  lOi).  Whyte 
V.  Home  Inmrance  Co.,  14  Lr.  Can.  Jur.  80.  Lucena  v.  Crawford,  2  N.  R.  85*4, 
1  Taunt.  835.  Tidswell  v.  Angerstdn,  Peake,  16 .  ( 3rd  ed. )  204.  HiU  v.  Sec- 
retan,  I  B.  &  P.  315.  Waters  v.  Monarch,  5  E.  ^  B.  881,  26  L.  J.  Q.  B.  102,  26 
L.  T.  217,  4  W.  R.  245. 

{I)  American  Basket  Cos.  v.  Farmville  Insurance  Co.,  8  Hughes  ( U.  S.  Circ. 
Ct.)25l. 

(m)  Smith  v.  Lascellea,  2  T.  R.  188. 

(n)  Paine  v.  MdUr,  6  Ves.  349.  Poole  v.  Adams,  12  W.  R.  683,  10  h.  T. 
N.  S.  287.  See  Rayner  v.  Preston,  18  Ch.  D.  1,  60  L.  J.  Ch.  472,  44  L.  T. 
N.  8.  787,  29  W.  R.  547.     But  see  Sutherland  v.  Pratt,  11  M.  k  W.  296. 

(o)  Milligan  v.  Equitable,  16  U.  C.  (Q.  B.)  814.  See  Columbian  insurance 
Co.  V.  Laterence,  2  Peters  (U.  S)  26,  10  Peters  (U.  S.)  607,  and  i  a  Co..  v. 
IVfer,  16Wend.  (N.  Y.)r9. 

{p)  4  Dalloz,  1868,  pt.  1,  887. 

75 


66 


THE    LAWS  OF  INSURANCE. 


'H 


m 


to  insure,  and  the  property  were  destroyed  by  fire,  ho  would  have 

to  rely  entirely  on  the  solvency  of  the  purchaser  (5). 
[*  65]  *A  man  who  had  bought  a  locomotive,  and  had  it  on  his 
own  premises,  was  suing  for  rescission  of  the  contract  when 
he  insured  the  locomotive.  Decree  of  rescission  was  pronounced 
before  the  fire,  but  no  notice  of  the  action  was  given  to  the  insurers, 
and  it  was  held  that  the  purchaser  had  an  insurable  interest  in  the 
locomotive,  but  that  the  benefit  of  the  insurance  enured  to  the 

Unpaid  vendor  of  goods.— An  unpaid  vendor  of  goods  who  insured 
them,  and  parted  with  them  before  loss,  was  held  not  entitled  to 
recover  on  his  policy,  since  his  interest  in  the  goods  was  wholly 

gone  (r). 

Paid  vendor.— A  vendor  who  has  been  paid  for  the  property  sold, 
but  has  not  conveyed  it,  ceases  from  the  time  of  payment  to  have 
any  insurable  interest  in  the  premises,  having  only  a  bare  legal 
estate  without  beneficial  interest,  lien,  or  liability.  But  if  at  the 
time  of  sale  he  has  agreed  to  hold  the  purchaser  insured  or  to  insure 
for  him,  he  would  have  an  insurable  interest,  even  after  pay- 
ment (s). 

When  vendor's  interest  ceases  so  a^  to  disentitle  him  to  policy-money. — ^The 
exact  point  at  which  the  vendor's  insurable  interest  ceases  may  be 
questioned.  In  Collingridge  v.  Royal  Exchange  (t)  the  vendor  was 
unpaid,  and  had  not  conveyed.  Lush,  J.,  there  seemed  to  consider 
actual  conveyance  the  point  at  which  the  vendor's  interest  ceased. 
But  in  a  New  South  Wales  case  decided  in  1881  (w)  it  was  held  that 
a  paid  vendor  who  had  not  executed  the  conveyance  had  no  real 
interest  in  the  property,  but  only  a  bare  legal  estate,  of  which  he 
was  under  contract  to  divest  himself,  and  it  was  in  that  case 
[*66]  said  that  in  the  absence  of  anything  I0  establish  *the  exist- 
ence of  a  real  interest  (nomething  to  lose),  or  that  there  was 
an  arrangement  with  the  purchaser  to  keep  the  policy  alive  for  his 
benefit,  the  vendor  could  not  succeed.  This  decision  was  arrived 
at  after  full  consideration  of  the  authorities,  and  seems  the  more 
correct;  audit  anticipated  the  principle  afterwards  laid  down  in 
Castellain  v.  Preston. 

Sale  in  fraud  of  creditors.  Covenant  to  insure. — A  vendor  and  pur- 
chaser have  been  held  in  Canada  to  have  an  insurable  interest,  al- 
though the  sale  was  in  fraud  of  creditors  (x).    A  covenant  to  insure 

(g)  Collingridge  v.  Royal  Exchange  Assurance,  37  L.  T.  N.  S.  525,  3  Q.  B. 
D.  178,  47  L.  J.  Q.  B.  32,  26  W.  R.  112. 

(q)  4  Dalloz,  1868,  p.  1,  887. 

(r)  Mollison  v.  Victoria  Co.,  2  N.  Z.  (Sup.  Ct.)  177. 

(«)  New  South  Wales  Bank  v.  North  British  and  Mercantile,  Jkc,  Co.,  2  N.  S. 
W.  Law  V89.     Castellain  v.  Preston,  11  Q.  B.  D.  898. 

it)  8  Q.  B.  D.  17*,  47  L.  J.  Q.  B.  82,  87  L.  T.  N.  S  535,  26  W.  R.  112. 

(tt)  New  South  Wales  Bank  v.  North  British  and  Mercantile  Insurance  Co., 
2  N.  S.  W.  Law  239.  Per  contra,  see  Insurance  Co.  v.  Up  de  Graff,  21  Penn.: 
618. 

(«)  Pettigrew's  Case,  28  U.  C.  {C»  P.)  70. 

76 


INSURABLE  INTEREST. 


*67 


gives  an  interest,  anl  it  has  been  held  that  where  the  covenant  was 
to  insure  two  sets  of  premises  held  for  different  terms  for  £2000, 
that  the  obligation  to  insure  in  that  amount  continued  after  the 
expiry  of  the  shorter  term  (y). 

Testa  fif  interest  on  sale  of  goods. — Where  the  question  of  insurable 
interest  or  no  insurable  interest  arises  upon  a  bargain  and  a  sale  of 
goods,  the  real  test  to  be  applied  in  determining  whether  the  party 
effecting  the  policy  had  such  an  interest  is,  were  the  goods  at  his 
risk?  If  they  were,  he  would  have  an  insurable  interest.  If  they 
were  not  he  would  not  have  an  insurable  interest  (z). 

TYust  policies  legal.  Names  of  trustees  and  c.  q.  t.  must  appear. — The 
Stat.  14  Geo.  III.  c.  48,  does  not  prohibit  a  policy  of  lito  insurance 
from  being  granted  to  one  person  in  trust  for  another  where  the 
names  of  both  persons  appear  upon  the  face  of  the  instrument  (a). 
But  an  insurance  on  the  life  of  A.  by  B.,  a  creditor,  as  a  trustee  for 
C,  who  has  no  interest  in  the  life,  would  be  void  (6). 

iHistee  may  insure  at  expense  of  estate.— A  trustee  is  justified  in 
insuring  in  course  of  good  management  at  the  cost  of  the 
estate,  and  where  the  ^cestui  que  trust  is  an  infant  the  trustee  [*67] 
is  empowered  by  statute  to  insure  (c). 

His  insurance  will  he  qu&  trustee  when  with  oum  money. — But  if  a 
trustee  or  executor  insures,  even  though  with  his  own  money,  and 
without  the  knowledge  of  his  cestui  que  trusty  he  will  be  considered 
to  have  effected  the  insurance  in  his  representative  character;  and, 
after  deducting  the  amount  of  the  premiums  he  has  paid,  he  will 
have  to  account  for  the  balance  to  the  persons  to  whom  the  benefi- 
cial interest  belongs  (d) 

Executor  de  son  tort.  Obligation  of  executor  to  insure. — An  executor 
or  administrator  has  an  intert  st  by  virtue  of  his  position  as  legal 
personal  representative  and  guardian  of  the  assets  (e\  and  he  has 
sufficient  interest  to  insure  in  his  own  name  the  life  or  a  person  who 
granted  an  annuity  to  his  testator,  and  which  the  testator  be- 
queathed to  persons  not  parties  to  the  insurance  (/).  An  executor 
de  son  tort  also  possesses  such  an  interest  (g).    An  executor  or  ad- 


(y)  Heckman  v.  Isaac,  6  L.  T.  N.  S.  8^3. 

(a)  Anderson  v.  Morice,  46  L  J.  C  P.  11,  35  L.  T.  N.  S.  566,  25  W.  R.  14,  per 
Hatherly,  L.  C,  1  App.  Cas.  743. 

(a)  Collett  V.  Morrison,  9  Hare  162,  31  L.  J.  Ch.  878. 

(6)  Lewin  Law  of  Trusts,  7th  ed.  95.     Young  v.  Union  Ins.  Co.,  24  Fed.  Rep. 
(U.  S.)  279. 

(c)  Lewin,  506.    Ex  parte  Andrews,  2  Rose  412,  1  Madd.  673.    Fry  v.  Fry, 
27  Beav.  146     44  &  45  Vict,  c  41,  s.  42,  sub  sees.  2  and  3. 

(d)  Ex  parte  Andrews.  1  Madd.  578,  2  Rose  410.     Sidaways  v.  Todd,  2  Stark. 
400.    Armitage  v.  Winterbottom,  1  M.  &  G  130.    Holland  v  Smith,  6  Esp  11. 

(c)  Croft  V.  Lindsay,  Freem.  Ch.  1.      Bail^  v.  Qould,  4  Y.  &  C.  Ex.  221. 
Ex  parte  Andrews,  2  Rose,  410,  1  Madd.  578. 
(/)  Tidswell  v  Angerstein,  Peake,  204. 

(g)  Marks  v.  Hamilton,  7  Ex.  823,  21  L.  J.  Ex.  109, 16  Jur.  151, 18  L.  T.  200. 
Lingley  v.  Queen,  1  Han.  (New  Bruns.)  280. 

77  ' 


*G9 


THE  LAWS  OP  INSURANCE. 


ministrator  is  not  under  any  obligation  to  insure,  nor  personally 
liable  if  he  fails  to  do  so  (A),  unless  he  is  under  express  directions. 
And  where  a  testator  as  lessee  was  bound  to  insure,  but  allowed  the 
insurance  to  expire  and  then  died,  the  executors  did  not  renew  the 
insurance,  and  *the  house  was  burnt  down  whilst  uninsured,  the 
executors  were  not  held  liable  for  not  keeping  up  the  insurance  (i). 
Morlgagm: — A  mortgacor  who  has  conveyed  away  any  legal 
[*  68]  estate,  *whether  he  be  in  possession  or  not,  has  an  insurable 
interest  until  foreclosure  absolute  (Jc). 

So  also  if  lie  has  executed  an  absolute  transfer  of  the  property, 
if  it  has  also  been  agreed  with  the  transferee  that  such  transfer  is 
only  by  way  of  charge  (/). 

Nor  does  it  seem  to  matter  whether  such  conveyance  be  by  way 
of  suretyship  or  for  a  principal  debt  (m). 

Mwtgngor  can  recover  full  value. — Where  an  insurance  is  made  by 
a  mortgagor  on  premises  on  his  own  account,  notwithstanding  any 
mortgage  or  other  incumbrance  on  the  premises,  he  will  be  entitled 
to  recover  the  whole  amount  of  his  loss,  not  exceeding  the  insur- 
ance, since  the  whole  loss  is  his  own,  and  he  remains  personally 
liable  to  the  mortgagee  or  other  incumbrancer  for  the  full  amount 
of  the  debt  or  incumbrance  (n). 

Assignment  to  mortgagee  of  mortgagor's  policy,  when  consented 
to  by  company  if  such  consent  be  needed,  is  merely  an  equitable 
transfer  eo  as  to  enable  a  mortgagee  to  recover  in  case  of  loss  (n). 
And  after  loss  the  mortgagee  can  re-assign  without  any  consent  (o). 

Judgment  creditor^8  interest  in  debtor^a  and  bankrupt's  propei-ty. — A 
judgment  creditor  has  in  some  of  the  United  States,  in  virtue  of 
ills  judgment,  an  insurable  interest  in  his  debtor's  property ;  but 
he  cannot  recover  from  the  insurer  any  injury  thereto  as  for  a  loss 
to  himself,  unless  he  also  shows  that  the  judgment  debtor  has  not 
sufficient  property  left  out  of  which  the  judgment  can  be  sat-. 
[*  69]  isfied  ( p).  And  a  creditor  has  in  that  country  been  also  *held 
to  have  an  insurable  interest  in  the  insurable  portion  of  a 
bankrupt's  assets  (p). 


(h)  Croft  V.  Lindsa}/,  Freem.  Ch.  1.     Bailey  v.  Gould,  4  Y.  &  C  Ex.  221. 
Ex  parte  Andrews,  2  Rose  410,  1  Madd.  573. 

(i)  Tidstcell  v.  Angerstein,  Peake  204. 
Jk)  Parker  J.  Equitable,  4  AH.  (New  Bruns.)  562.     Kelly  v.  Phcenix,  2  Han. 
^ew  Bmns.)  266.    See  Marts  v.  Cumberland  Co,  44  New' Jersey  Law  478,  and 
litcMand  County  Co.  v.  Sampson,  38  Ohio  St.  672. 

x^^^LF'^'i^  y-  5^^^  ^^  ^-  ^  N-  S-  673-4.     And  Gardner  v.  Cazenove,  1  H.  & 
N .  423,  which  discusses  the  effect  of  such  conveyance. 

(m)  Smith  v.  Jtoyal,  27  U.  C.  (Q.  B.)  54 
Sti"^  J«rP««<cr  V.  Providence  Washington,  16  Peters  (U.  S.)495,  501,  per 

(o)  De  Launat/  v.  Northern,  2  N.  Z.  (Sup.  Ct.)  1. 

(p)  Spare  v.  Home  Mutual  Insurance  Co.,  8  Sawyer  (U.  S.  C.  Ct )  618. 

JA-  ^''*'*«^*;;-  G^ania  Co..  62  N.  Y.  47 ;  but  see  contrh,  Matcher  v.  King 
WtUtam's  Town  Co.,  3  Buchanan  Cape  (East.  Distr.  Rep.)  271        *^^^  "^*"^ 

78 


INSURABLE  INTEREST. 


*70 


Pledgee.  Paumhroker. — ^A  pawnbroker  or  other  pledgee  has  an  in- 
surable interest  iu  the  property  pledged  to  the  aaiount  of  his  loan ; 
and  as  a  pawnbroker  is  oy  statute  made  liable  for  loss  by  fire  of 
pawned  property,  he  is  allowed  to  insure  the  full  value  thereof  (  g  ). 

Promise  not  to  require  payment  of  debt. — A  promise  by  a  creditor 
to  a  debtor  without  consideration  not  to  require  payment  of  his 
debt  during  his'  life,  does  not  give  the  debtor  an  insurable  interest 
in  the  life  of  the  creditor  (r). 

Creditor. — A  creditor  has  an  insurable  interest  both  in  the  life  of 
his  debtor  and  of  any  surety  for  the  debt 

A  surety  has  an  insurable  interest  in  the  life  of  his  co-surety  to 
the  extent  of  his  proportion  of  the  debt,  and  also  in  the  life  of  the 
principal  debtor  (a). 

A  partner  has  an  insurable  interest  in  respect  of  capital  con- 
tracted to  be  brought  in  by  co-partner  (0- 

Extent  of  credifor^a  interest. — ^The  limit  of  the  creditor's  insurable 
interest  is  the  amount  of  the  debt  at  the  time  when  the  policy  is 
granted  (u). 

Debt  must  be  lawful.  Debt  of  Minor. — The  debt  must,  however, 
be  one  which  the  law  recognizes ;  therefore  a  sum  won  at  gambling 
would  not  be  sufficient.  But  a  note  given  for  a  debt  incurred  dur- 
ing minority  gives  an  insurable  interest  (x). 

*Paid  since  policy. — Although  the  debt  may  have  been  paid  [*70] 
since  the  date  of  the  insurance,  the  policy-money  is  still  re- 
coverable (y),  (•). 

Statute-barred. — The  creditor's  right  to  the  policy-money  is  not 
affected  by  the  debt  becoming  statute-barred  oefore  the  life 
drops  (2). 

Fully  secured. — It  would  seem  that  a  secured  creditor,  ^hose  se- 
curity appears  to  be  ample,  has  nevertheless  an  insurable  interest 
in  his  debtor's  life;  for  Lord  Kenvon  said  (a),  "A  creditor  has  cer- 
tainly an  interest  in  the  life  of  his  debtor,  because  tiie  means  by 


(g)  35  &  86  Vict,  c  93,  s.  27. 

(r)  Hebdon  v.  West,  32  L.  J.  Q.  B.  86,  7  L.  T.  N.  S.  854,  3  B.  &  S.  579,  11 
W.  R.  4-.J3,  9  Jur.  N.  S.  747. 

(a)  Von  Lindenau  v.  Desborough,  3  C.  &.  P.  353,  SB.  &C.  586.  Branford  v. 
Saunders,  25  W.  R.  650. 

(t)  Connecticut  Mutual  v.  Lucks,  108  U.  S.  498. 

(h)  Anderson  v.  Edic,  2  Park  915  (8th  ed.).     Godsall  v.  Boldero,  9  East  72. 

(«)  Dwyer  v.  Edie,  2  Park  9 '4  (8th  ed.). 

(y)  Law  V.  London  Indisputable,  1  Kay  &  J.  223,  24  L.  J.  Ch.  196,  1  Jur.  N. 
S.  179,  8  W.  R.  155,  ^4  L.  T.  108.  Ferguson  v.  Mass.  Mut  Life,  32  Hun.  (N. 
Y.)  806. 

(2)  Garner  v.  Moore,  8  Drew  277,  24  L.  J.  Ch.  687.  Bawls  v.  American,  86 
Barb.  (N.  Y.) !  57,  Bliss  Life  Insurance,  8  §  18-37.  • 

(a)  Anderson  v.  Edie,  2  Park  ?  4  (8th ed.). 

^  The  fact  that  the  insurable  interest  in  a  life,  which  existed  at  the  time  the  in* 
Burance  was  effected,  ceased  before  death  of  the  assured,  is  immaterial  on  the 
question  of  the  right  to  the  insurance  money.    Corson's  Appeal,  113  Pa  L.  488. 

79 


71* 


THE  LAWS  OF  INSURANCE. 


:!!'■■■' 


'iili 


which  he  was  to  be  satisfied  might  materially  depend  upon  it,  and 
at  all  events  the  death  must  in  pU  cases  in  some  degree  lessen  the 

^^^Pdili  on  life  of  debtor's  wife.— A  debtor  and  his  wife  assigned  a 
chose  in  action  of  the  wife  to  a  creditor  of  the  husband  to  secure 
£300  owingby  the  husband.  The  creditor  insured  the  life  of  the 
wife  for  £20<);  and  although  the  chose  in  action  was  not  reduced 
into  posaessirjn  during  the  life  of  the  wife,  on  her  death  the  cred- 
itor was  held  to  have  an  insurable  interest  (6). 

Joint  debtors.— Where  A.  and  B.  jointly  execute  a  bond  as  a  col- 
lateral security  for  the  repayment  of  a  sum  of  money,  A.  has  an 
interest  in  B.'s  life  in  respect  of  his  liability  in  case  of  B.'s  death 
to  pay  the  whole  of  the  debt.  But  his  interest  in  the  life  is  only 
in  half  the  amount  of  the  debt  secured  by  the  bond,  since  he  was 
in  any  event  liable  for  the  other  half  (c). 

Mortgage  equitable  Hen  and  debt.— A  morgagee  has  an  insur- 
P'''71]  able  interest  in  the  mortgaged  *propertv  up  to  the  amount  of 
the  debt,  whether  the  mortgage  is  legal  or  equitable;  and  it 
seems  perfectly  clear  that  a  person  having  a  lien  or  an  interest  in  the 
nature  of  alien  on  the  property  insured  has  an  insurable  interest,  and 
it  will  make  no  difference  in  such  a  case  that  he  might  still  have  a 
right  to  pursue  his  debtor  personally  for  the  debt  on  account  of 
which  the  lien  attached  (d).  A.  debt  which  has  no  reference  to  the 
article  insured,  and  which  cannot  create  a  lien  on  it,  will  not  give 
an  insurance  interest  j  but  a  debt  which  arises  in  consequence  of 
the  article  insured,  and  which  would  have  given  a  lien  on  it,  does 
give  an  insurable  interest  (c) ;  and  see  Davies  v.  Home  Ins.,  3  U.  C. 
(App.)  269,  where  it  was  held  that  the  endorser  of  an  accommoda- 
tion bill  had  an  insurable  interest  in  the  goods  for  which  the  bill 
was  given,  if  it  had  been  agreed  that  he  should  be  paid  out  of  the 
proceeds  of  such  goods,  Neither  actual  or  constructive  possession 
of  the  property  need  be  in  the  assured  either  when  the  policy  is 
issued  or  the  loss  happens.  It  is  enough  to  have  an  equitable  L'  jn 
on  the  specific  property  covered  by  the  policy  (f). 

Policy  good  thougn  interest  may  be  defeated  by  third  person. — If  the 
interest  of  the  assured  be  liable  to  be  defeated  by  the  act  of  a  third 
person,  or  be  voidable,  the  policy  will  not  therefore  be  invalidated 
under  14  Geo.  III.  c.  48,  s.  2  (g). 

Insurable  interest  requisite  in  accident  insurance, — Insurance  against 
death  by  accident  is  within  the  statute  as  to  interept  (h). 

(b)  Htnson  v  BlacJcwcll,  4  Haro  434,  0  Jur.  390,  14  L.  J.  Ch.  820 

(c)  E-anford  v.  Saunders,  25  W.  R.  050. 

(d)  Hancox  v.  Fishing  Inmiance  Co  ,  8  Summer  139,  per  Story,  J.,  and  see 
niarke  v.  Scottish  Imperial,  4Cnnrtfla  (S.  C.)  192. 


«)  Wolfv.  Horncastle,  1  B.  &  P.  823.  per  Buller,  J. 

/)  Per  Henry  J.,  in  Clarke  v.  Scottish  Imperial,  4  Canada  (S.  C  )  218. 

Divyerv.  Kdie,  2  Park  914. 


jr)  Hill  V.  Secretan,  1  Bos.  &  P.  816.    Lindenauv 
8  Cf.  &  P.  858.    Claf/  v.  Harrison,  10  B.  &  C.  90.    _  ., „ 

(A)  Shilling  v.  Accidental  Death  Insurance  C<f.,  1  F."&  F.  116.  2  H.  &  N.  4a! 
26  L.  J.  Ex.  26' ,  27  L.  J.  Ex.  16,  20  L.  T.  08,  6  W.  R.  667.  ^ 

bO 


* 


INSURABLE  INTEREST. 


*78 


Name  of  person  irUerested  mvM  appear. — The  statute  (s.  2) 

r*72]  requires  iho  name  of  the  person  for  *who8e  use  or  benefit,  or 

on  whose  account  the  policy  is  eflFected,  to  be  iiisertetl  therein 

(i).    Th-^refore  where  a  husband  obtained  a  loan  from  his  wife's 

trustee?  upon  his  obtaining  a  surety  for  its  repayment,  and  the 

surety  stipulated  that  the  husband  should  insure  his  wife's  life,  the 

'  having  induced  his  wife  to  insure  her  own  life  in  her  own 

lout  reference  to  its  being  for  her  husband,  the  policy  was 


liusband 
name  witl 
held  void  (*). 


Fire  insurance  by  one  partner  injimCa  name,  policy  belongs  to  firm. — 
It  has  been  held  in  one  American  State  that  where  insurance 
against  loss  by  fire  is  effected  by  a  member  of  a  firm  in  the  firm's 
name  upon  property  of  the  firm,  and  the  premium  therefor  is  paid 
fromfun'ds  of  the  firm  though  charged  by  such  member  to  hiLaself, 
the  insurance  will  be  for  the  benefit  of  the  firm,  notwithstanding 
that  the  partner  thus  effecting  it  intends  it  for  his  own  private 
benefit  (I). 

It  is  immaterial  whether  the  contract  in  relation  to  which  the  in- 
surable interest  arises  is  or  is  not  undnr  seal  or  in  writing,  or 
whether  it  is  merely  verbal,  so  far  as  the  rin;hts  of  the  parties  are 
concerned.  This  circumstance  only  varies  the  mode  of  proof  with- 
out altering  the  principle  on  which  the  ""t^hts  of  the  parlies  de- 
ptn«l  (m). 

Absence  of  insurable  interest  ordy  defence  to  insurer. — If  a  policy  in 
the  name  and  on  the  life  of  anotlier  he  effected  for  his  own  benefit 
l»y  a  person  who  has  no  insurable  interest  in  such  life,  and  the  in- 
surance  company,  on  the  death  of  the  person  whose  life  is  insured, 
jtays  the  insurance- monejjr  to  the  person  effecting  the  insur 
ance,  lie  is  entitled  to  retain  the  monev  ns  ajrainst  *the  leuj,!  [*  73  ] 
personal  representative  of  thedece  >t«e(l  ;*  and  although  the  ille- 
gality of  the  policy  under  14  Geo.  III. c.  48,  on  the  ground  of  absence 
of  insurable  interest  would  have  constituted  a  good  defence  to  an 
action  against  the  insurance  company  at  the  suit  of  the  person  ef* 
fectinethe  insurance,  yet,  the  money  having  been  paid  to  him,  such 
illegality  would  affect  his  right  to  retain  it;  for  the  statute  is  a  de- 
fence for  the  insurance  company  only  if  they  choose  to  avail  them  • 
selves  of  it  (n). 

(t)  Hodson  V.  0b8erv«r,  ctr.,  Co ,  8  E.  &  B.  40,  8  Jur.  N.  8.  11^5,  20  L.  J.  Q, 
B  308,  29  L.  T.  278,  5  W.  R.  71 2 

(it)  Emm  V  Jiiijnold.  20  I.  T.  N  S.  C5!),  L.  R.  4  Q.  B  G22,  08  L.  J.  N.  S. 
Q.  li.  2113.  10  B.  ti  8.  021,  17  W.  R.  882. 

(l)  Tebbittsv.  Dearborn,  74  Maiho  8(»2  (1888). 

(in)  Miller  v.  Ware,  1  C  &  P.  23B,  per  Park,  J.  Patrick  v.  Eanes,  3  Camp. 
442,  per  Kllenborough,  C.  J 

(«)  Worthinqtnn  v.  Oirtin,  1  Ch.  D.  410  46  L  J  N  R  Ch.  250.  .13  L  T.  N. 
8  828,  24  VV.  li  228  Seo  also  Trot^p  v.  Anchor  Co  ,  8  Russ.  t  0«1.  (Nov  Sco  ) 
2U. 

*If  A,  who  is  neither  B's  relative  nor  creditor,  inmircH  B'«  lifo,  and  to  reitn- 
burso  himself  fur  oiiiIhvs  to  be  made  under  a  oontriict  tu  Nnpport  I)  for  life,  he 
can  only  recover  from  {nsurjincu  monry  enough  to  cover  expenses.  The  rest  h%" 
longs  to  B's  estate.    Seigrixtv  ^VAmo^te,  ilii  Pa.  St  826 

6  PORTER  ON  INSURANCE.  8) 


*73 


THE  LAWS  OP  INSURANCE. 


.  Agent  mmt  pursue  hie  authority. — Where  the  defendant  authorized 
two  of  his  creditors  to  effect  a  policy  of  insurance  on  his  life  for  a 
certain  time  in  their  own  names  as  a  security  for  their  debt,  the 
policy  to  be  assigned  to  him  when  the  demand  was  discharged,  and 
they  effected  the  insurance  in  their  own  names  and  that  of  &  third 
person  who  subsequently  became  their  partner,  it  was  held  that  the 
authority  given  by  defendant  was  not  pursued,  and  that  an  action 
for  the  recovery  of  the  premiums  could  not  be  maintained  (o). 


(o)  Baron  v.  Fitzgerald,  9  L.  J.  N.  S.  C.  P.  158,  6  Bing.  N.  C  201. 


Ill 


# 


THE  PREMIUM. 


♦76 


♦CHAPTER  III. 


[*74] 


THE  PREMIUM. 


Premium,  nature  of. — The  premium  *  is  the  price  for  which  the  in- 
surer undertakt .  his  liabilities.  It  may  be  a  consideration  other 
than  money  payment;  e.  g.,  in  a  mutual  insurance  it  may  consist 
of  a  liability  to  contribute  to  the  losses  of  other  members  of  the 
mutual  society  («).  The  members  in  such  a  socif^ty  being  both  in- 
sured av'i  int^nrers,  ofiFer  as  a  premium  their  liability  aforesaid,  and 
as  insui  ;rs  receive  as  premium  the  right  to  have  their  own  loss  paid 
whenever  it  happens. 

Must  be  agreed. — In  Lucena  v.  Cm  jford  (6)  the  premium  is  de- 
fined by  Lawrence  J.,  as  "a  price  paid  adt  (j^uate  to  the  riBk,"  but 
the  adequacy  of  the  premium  is  purely  the  insurer's  concern.  He 
cannot  dispute  the  validity  of  the  contract  merely  because  the  pre- 
mium is  inadequate;  for  as  it  is  the  price  for  which  he  upon  his 
own  calculations  agrees  to  take  the  risk,  his  own  agreement  is  con- 
clusive against  him.  The  insurer's  satisfaction  %7ith  the  premium 
is  a  condition  precedent  to  the  formation  of  the  contract  (Malyns 
112).  In  the  old  policies  the  words  "I  am  content  with  this  assur- 
ance" were  inserted  as  an  acknowledgment  that  tie  insurer  was 
satisfied  with  and  would  not  later  dispute  the  sufficiency  of  the 
premium.  The  only  point  which  the  assured  need  consider  with 
regard  to  the  sufl[iciency  of  the  premium,  is  whether  it  is  suffi- 
ciently proportionate  to  the  risks  intended  to  be  run  to  enable  the 
insurer  to  meet  the  average  losses  of  his  business.  But  such 
a  consideration  *in  any  cape  is  merely  secondary,  as  his  [*75] 
..ction  is  most  likely  to  be  guided  by  his  knowledge  or  belief 
as  to  (he  general  solvency  of  his  insurer  rather  than  the  special  risk 
undertaken. 

Premium  need  not  be  prepaid. — Prepayment  of  the  premium  is  not 
in  law  a  condition  precedent  to  the  making  of  a  comi:)lete  contract 
of  insurance  (c).  But  it  is  the  almost  universal  practice  of  insur- 
ers other  than  marine  to  stipulate  that  the  contract  shall  not  begin 

Tucker,  I'J  Q.   B.   1).    176,  1S7,  41)  L.  T.  N.  8. 


{(t)  Lifon  Mutual  Marine  v. 
764 
(b)  2  N.  R  aoi.  1  Tiiunt,  3^5. 
(<•)  Dai/ton  Jaimranre  Co  v.  A'«%,  U4  '"Jhio  St.  845   18  Am.  Rep.  612. 


v./, 


LinidiiH  and  Sta^p'o 
'  Tlio  wonJ  pnTTiiuii 


rdshire,  1  Ottbabt'  &  Kllis  47. 


Kelly 


premium  comes  cither  from  the  word  pnvmium,  sigiiityin"  Dricp,  or 
from  the  word  pri:n<),  becuuae  formerly  tli«>  |iremiiim  wns  paid  before  u.l,  uiid  at 
the  time  of  fiigiiiiif;  the  policy.  Hence  it  is  culled  ^vrmewr,  prrmie,  amst,  or  agio 
d^ assurance,    Em.:rigon,  ■^'jap.  3,  sec-  1. 


*76 


THE  LAWS  OF  INSURANCE. 


i     .    ■    •! 


I 


iiiiif^" 


to  take  effect  until  the  premium  has  been  paid,  and  the  Courts  in 
presence  of  such  a  stipulation  will  not  (unless  the  premium  has 
i)een  paid)  give  effect  to  the  contract  where  a  loss  has  happened 
after  an  agreement  to  issue  and  accept  a  policy,  but  before  the 
policy  has  been  issued,  or  even  when  it  has  been  delivered  as  an 

escrow  (d).  , 

Nonpayment.  Waiver.— But  when  it  is  a  qpndition  m  the  policy 
that  the  policy  shall  not  be  binding  until  the  premium  is  paid  the 
Court  will  readily  infer  a  waiver  of  such  condition  (e).* 

Forfeiture.— Since  the  Courts  will  not  favour  a  forfeiture  (and  this 
applies  as  much  to  forfeitures  under  conditions  in  policies  as  to 
those  under  covenants  in  leases),  it  has  been  held  in  America  that 
a  forfeiture  under  a  life  policy  for  non-payment  of  premium  must 
be  claimed  before  the  death  of  the  assured,  at  which  date  the  lia- 
bility accrues,  and  can  no  longer  be  denied  (/).* 

It  does  not,  however,  seem  necessary  in  that  case  to  go  so  far. 

The  doctrine  of  estoppel  rather  than  waiver  applies  to  cases 

['•'76]  where  the  insurer  discovers  a  forfeiture,  *and  lies  by  until 

the  happening  of  the  loss.    But  insurers  by  their  acts  may 

estop  themselves  from  setting  up  forfeiture  (g). 

If  a  policy  containing  a  conaition  that  it  shall  not  be  binding 
until  the  premium  is  paid,  -and  also  an  acknowledgment  of  the 
receipt  of  the  premium  is  delivered  to  the  assured  before  payment 
of  the  premium,  this  raises  a  presumption  of  waiver  of  such  con- 
dition, and  of  an  intention  to  give  credit  for  the  premium,  the  con- 
dition notwithstanding  (A). 

Policy  not  binding  till  premium  paid.  Waiver  of  the  condition. — A 
policy  stipulated  that  it  should  not  be  binding  until  the  actual  pay- 
ment of  the  premium,  and  the  Court  held  that  it  was  competent  for 
insurers  to  waive  the  condition,  and  that  such  waiver  might  be  es- 
tablished by  evidence  of  an  express  agreement  to  that  effect  or  by 


(d)  Flmt  \POhio,  Ac,  Co.,  8  Ohio  501.  Bodine  v.  Home  Co.,  51  N.  Y.  117. 
See  Canning  v.  Farquhar,  10  Q  B.  1).  727,  55  1..  J.  Q.  B.  225,  !)4  W.  R.  428. 

(e)  Supple  V  Cann,  9  Ir.  C.  L.  1,  Sunsum  010  t7  .•nq. 

if)  See  Young  v.  Mutual  Life  Co.,  2Snwyor  (C.  Ct.  IJ.  S.)  325. 

ig)  Sec  ScoUiaJi  Equitable  v.  liuinf,  4  C.  S.  C.  (4tli  senes)  1070.  Winq  v. 
Harvey,  5  Do  G.  M.  &  (J.  205,  23  1..  J.  Ch.  511,  n  L  T.  120,  18  Jur.  3!)4,  2  W. 
R.  870.    Apphton  v.  rhcenix,  47  Am.  R*i»  2",>0. 

(A)  Masse  \.  Hoehelaga  Co.,  *i2  Lr.  Cuii  .Fur.  124.  Jiasrh  v.  Humboldt  Mu- 
tual, 85  New  Jersey  429,  3  Kent  Conim  200.  Andvrson  v.  Thornton,  8  Ex.  426. 
Von  Wein  v.  Saitthh,  Ac  ,  Co.,  52  N.  Y.  (Sup.  Ci )  490. 

'  A  condition  in  a  policy  exempt imcompunv  from  liiibility.  until  actnul  piiytnent 
of  oremium,  mny  bo  waived.  Universal  F.  Ins.  Co.  v  Jilork,  109  Pa  Stut.  535. 
Elkensv.  Susquehanna  Mutual  F.  Ins.  Co.,  118  Pu.  St.  380.  Alabama  Oold 
Life  Ins.  Co.  v.  Garmauji,  74  Ga,  51. 

'Life  policy  in  mutual  company  is  not  to  bo  deemed  forfeited  for  non-piiymont 
of  interest  or  premium  notes,  where  contract  docH  not  so  provide,  wliero  there 
would  be  no  forfeiture  for  non-payment  of  the  principal,  and  v  liero  company  ban 
iuiidh  of  asBured  sufficient  for  the  intercHt.  Northwestern  Mui.  Life  Ins.  6o.  v. 
Fort,  82  Ky.  269. 


THE  PREMIUM. 


*77 


circumstanct  s,*  and  that  delivering  a  policy  confessing  the  pay- 
Uieut  of  premium  was  evidence  of  the  waiver  (r). 

Credit  for  premium. — In  any  case  where  credit  is  intended  to  be 
given  for  premiums,  and  is  actuaHy  given,  non-payment  ther^  of 
will  not  avoid  the  policy;*  and  is  no  defence  to  an  action  on  the 
policy,  but  merely  matter  of  set-off  {k).  Even  though  the  assured 
has  b*en  enjoined  in  Chancery  to  pay  the  premiums,  and  h.^p  not 
done  so,  it  is  no  defence  to  the  insurer  (0- 

Receipt  in  policy. — Where  the  policy  admitted  payment,  pirol 
evidence  that  payment  had  not  actually  been  made  was  hela  in- 
admissible (m). 

*In  the  United  States  of  America,  where  a  note  at  sixty  [*  77] 
days  was  accepted  for  the  premium,  payment  of  which  was 
admitted  in  the  policy,  the  policy  did  not  become  void  on  non-pay- 
ment of  the  note,  altliough  the  policy  contained  a  condition  that 
wliere  a  note  was  taken  for  the  premium  it  should  be  considered  a 
cash  payment,  provided  it  was  paid  when  due  (m). 

Credit  for  premiums. — When  a  premium  is  paid  by  bill  of  ex- 
change or  promissory  note,  the  liability  of  the  insurer  lasts  until 
the  maturity  of  the  note  and  even  thereafter,  unless  it  be  stipulated 
that  it  shall  terminate  if  the  note  is  dishonoured  (n).  For  the  ac- 
ceptance of  a  note  is  a  form  of  giving  credit.  And  the  Supreme 
Court  of  the  United  States  has  held  that,  to  insure  a  forfeiture,  the 
bill  must  be  protested  and  proceeded  on  (o). 

Waiver  by  acceptance  of  premium.. — Acceptance  of  premiums  falling 
due  after  breach  of  condition  or  discovery  thereof,  evinces  an  elec- 
tion to  continue  the  policy  as  valid,  if  the  existence  of  the  breach 
bo  known  (p).  So  it  the  premium  be  accepted  by  an  agent,  and 
remitted  with  information  of  the  breach,  the  insurers  must  return 
it  at  once  or  they  will,  it  seems,  be  liable  (q)' 


(i)  Goit  V.  National  Protection,  ^5  Barb.  (N.  Y.)  189. 

(k)  Millar  v.  Life,  Ac,  Co.,  12  Wal.  (U.  S.)  285,  801. 

(/)  Hodgson  v.  Marine,  6  Craiich  (IT.  S.)  100. 

(w)  Anderson  v.  Thornton,  H  Ex.  425.  Dalzell  v.  Mair,  1  Camp.  532.  De 
Garmindc  v.  IHnou,  4  I'aiint  240. 

{m)  Illinois  ventral,  dec  ,  Co.  v.  Woolf,  37  Illinois  854.  See  also  Compagnie 
d'  Assurance  v.  Grammon,  24  Lr.  Can.  Jur.  82. 

(n)  Hopkins  v.  Hawkeye  Insurance  Co  ,  57  Iowa  203.  Kelly  v.  London  and 
StagonMire  Co.,  1  Cab  &  Ellis  47. 

(o)  Knickerbocker  Co.  v.  Pendleton,  112  U.  S.  09(1  (Davis  Rep). 

(p)  Armstrong  v.  Ttirquand,  9  Ir  C   L.  8?,  66. 

Iq)  Iti'ilish  Industry  Co.  v.   Ward,  17  C.  \\.  (t46-049. 

'  liifi)  inHiiranco  conipnny  isHiu'd  p:iniphlet  containing  statoment  that  thirty  days 
ffrace  allowed  on  payment  of  pren  aims.  Held,  that,  notwithstanding  condition, 
the  policy  could  not  bo  forfeited  wiien  premium  tendered  was  overdue,  the  state- 
ment in  pamphlet  being  relied  upon.  Fowler  y.  MctrovHtan  L.  Ins.  Co.,  41 
Hun.  (N.  Y.)357. 

"  A  custom  to  give  short  credits  for  premiums  due  may  be  construed  as  a  wniwr 
of  the  right  to  insist  on  a  forfeiture.  Lelmnon.  Mut  Ins  Co.  \.  Hoover,  lllM'a. 
St.  591.     Veunantv.  Traveller's  Ins.  Co  ,  81  Fed  Rpp.  822. 

"  Acceptance  of  premium,  after  default,  operates  as  a  waiver  of  the  condition 
timith  vs.  iSt.  Paul  F.  Jtc  Jm.  Co.,  8  Dak.  80. 


*79 


THE  LAWS  OF  INSURANCE. 


> 


m 
,1 


Waiver  of  farfdture  by  non-payment.— An  insurance  company 
granted  a  loan  upon  a  bond  with  sureties,  and  a  policy  on  tlie  life 
of  the  borrower  as  collateral  security.  The  premiums  not  being  paid 
within  the  days  of  grace,  the  insurers  demande('  icin,  and  com- 
menced actions  for  them  against  the  sureties  (/•).  rhia  would  have 
amounted  to  a  wavier  of  the  forfeiture,  but  as  the  sureties  refused 
to  pay  the  premiums,  V.-C.  Shadwell  held  that  they  thereby  neu- 
tralized the  effect  of  this  waiver. 
[  *  78]  *  Waiver  of  right  to  forfeit  policy. — If  the  insurer  receive  notice 
from  whatever  source  that  the  risks  insured  against  have 
been  misrepresented,  concealed  or  incompletely  disclosed,  or  in- 
creased or  varied,  and  accepts  further  premiums  on  the  same  policy 
at  the  rate  originally  agreed,  in  such  case  his  right  to  avoid  the  con- 
tract is  waived,  and  he  cannot  subsequently  have  it  avoided  even 
on  tender  of  such  premiums  (s). 

Company  bound  by  agenfs  receipt  of  premium.  Agent  received  pre- 
mium knowing  assured  was  abroad  and  policy  not  forfeited. — Where  a 
life  policy  was  subject  to  a  condition  avoi(hng  it  if  the  assured  went 
out  of  Europe  without  licence,  and  an  assignee  of  the  policy  paid 
the  premiums  to  a  local  agent  of  the  company  and  informed  nim 
that  the  assure''  was  in  Canada,  the  agent  stated  that  this  would 
not  avoid  the  policy,  and  received  the  premiums  until  the  death  of 
the  assured;  and  the  Court  held  that  the  company  were  thus  pre- 
cluded from  treating  the  policy  as  forfeited  (t). 

Payment  to  agent  after  forfeiture. — Where  a  man  i.s  the  agent  of  an 
insurance  company  to  receive  premiums  on  subsisting  policies,  re- 
ceipt by  him  of  premiums  on  policies  as  to  wliich  there  had  been 
breach  of  condition,  such  payments  being  made  in  belief  that  the 
policies  were  good  and  subsisting,  will,  it  seems,  bind  the  com- 
pany (u). 

A  fortiori.,  if  the  directors  receive  tlie  premiums  through  such 
agent,  or  indeed  any  agent,  with  knowledge  or  notice  of  the  breach, 
they  are  estopped  from  saying  that  they  received  the  premiums 
otherwise  than  for  the  purpose  and  in  the  faith  for  which,  and  in 
which,  they  were  paid  (x). 

But  if  an  agent  iias  no  authority  to  contract  for  the  company,  re- 
ceipt by  him  of  an  overdue  premium  will  not  be  war\'er  by 
[*  7y]  the  company  pf  a  forfeiture.    Nor  will  *the  debiting  of  tfie 
premium  by  the  company  to  the  agent  amount  to   such 
wavier  (i/).    If  the  agent  fails  to  return  the  policy  as  lapsed  within 
the  time  directed  by  his  instructions,  it  is  doubtful  whether  thiw 

(r)  Edge  v.  Duke,  18  L.  J.  Ch   183 

(.f)  Scottish  Equitable  v.  Jiuiiit,  4  C.  S.  C.  (4tli  HfTi.>s)  1070. 

X.  iZ\J,  it  \V ,  Iv.   o70, 
(m)  Sumo  cnKo 

(x)  7&/d.     KeKarding  renewal  roccipt  with  (•ondilion  hh  to  receipt  from  houd 
otfice,  mde  Moore\.  Hnlfpi/,  \)  Victoria  I,.  II  4(H). 

(y)  Acej/  V.  Fernie,  7  M.  &  W.  151,  10  L.  J.  Ex.  9. 

86 


THE  PREMIUM. 


*80 


would  help  the  assured,  unless  the  power  to  give  credit  for  pre- 
miums is  within  the  scope  of  the  agent's  mandate. 

Condition — waiver — agent. — It  is  of  course  a  mere  question  of  fact 
whether  or  not  the  agent  has  such  authority ;  and  if  the  authority 
is  denied,  the  plaintiff  must  prove  it,  or  set  up  facts  from  which  it 
may  fully  be  inferred  (2). 

Overdue  premiums,  when  acceptance  no  waiver. — Payment  of  over- 
due premiums  after  the  death  of  the  assured  will  not  save  the  policy, 
whether  payment  be  made  by  the  assessors  of  the  assured  (a)  or 
tlie  beneficial  owner  of  the  policy ;  and  acceptance  by  the  company 
in  ignorance  of  the  death,  which  ignorance  is  shared  oy  the  person 
offering  payment,  will  not  save  the  policy  (6). 

Fur  overdue  premium  cheque  given.  Payment  not  got  before  death. — 
An  extreme  case  has  lately  arisen  in  C^inada.  The  assured  could 
not  pay  a  premium,  but  pave  his  cheque  on  the  understanding  that 
it  should  not  be  presented  till  there  were  funds  to  meet  it.  It  was 
several  times  presented  and  dishonoured,  but  at  last  funds  Fufficient 
were  lodged  in  t'le  bank,  and  notice  thereof  given  to  the  insurer 
shortly  before  the  bank's  hour  for  closing.  The  insurer's  agent 
waited  till  next  morning,  and  the  assured  was  killed  during  the 
evening.  The  Court  of  Queen's  Bench  held  by  a  majority  that 
payment  was  not  made  in  time(c) — (1)  Because  the  cheque  did  not 
operate  as  payment,  but  only  as  a  means  thereto;  (2)  That 
by  the  death  before  actual  payment  mutuality  *between  the  [*  80] 
parties  became  impossible,  and  the  health  certificate  could 
not  be  given. 

Renewal  premium.  Condition  as  to  good  health. — The  stipulation 
contained  in  mo-t  life  policies  that  overdue  premiums  will  only  be 
received  if  the  assured  is  in  good  health  at  the  time  of  tendering 
them,  is  merely  to  guard  against  frauds  being  committed  upon  the 
insurer,  not  to  prevent  him  from  dealing  with  the  insured  in  full 
knowledge  of  tne  facts  as  to  his  health  which  he  and  his  fiuends 
possessed.  So  where  the  assured  had  received  what  turned  out  to 
be  his  death- wound,  but  at  the  time  neither  he  nor  his  doctor  had 
any  apprehension  that  it  would  be'  fatal,  and  paid  an  overdue  pre- 
mium, the  payment  in  Canada  was  held  good  and  the  forfeiture 
completely  waived  (d). 

If  no  risk,  premium  returnable. — In  Tyrie  v.  Fletcher  (e)  Lord  Mans- 
field said :  "  Where  the  risk  has  not  been  run,  whether  its  not  hav- 
ing been  run  was  owing  to  the  fault,  pleasure,  or  will  of  the  insured 


•(2)  UrUish  Indmtry  Co  v.  Ward,  17  C.  B.  644,  649.  But  ace  Montreal  v. 
M'GilUmm,  UJ  Mx)()re  P.  C.  8!). 

(«)  Simpson  V.  Acridentat.  Death,  2  C  B.  N.  S.  257,  26  L.  J.  C.  P.  280,  80  L. 
T.  31,  :i  .lur.  N  S  1()7»,  5  W.  U.  307.     Wanty.  lilunt,  12  East  183. 

(b)  rriU-hnrd  v.  Merchaiitn\  .fv  ,  Co  ,  8  C.  B.  N.  S.  022,  27  L.  J.  C.  P.  100,  30 
L.  T.  31 H,  (1  W.  It  840,  4  .Tur.  N.  8.  807. 

{<■)  Xrill  V.  Viiion  Mutual  Life,  45  V.  C.  (g.  IJ.)  503.  Affd.  7  Ontario 
(Am.)  HI. 

id)  Ciimphell\.  National  Tumiranre  Co..  24  I'.  C.  (C.  P.)  133. 

(«)  2  row]).  008,  089.     Want  v.  Blunt,  1 J  East  183. 

87 


82 


THE   LAWS  OF  INSURANCE. 


or  to  any  other  cause,  the  premium  shall  be  returned.  The  under- 
writer receives  a  ]>rtmium  for  running  theriskof  mdemnifying  the 
insured,  and  whatever  cause  it  be  owing  to,  if  he  does  not  lun  the 
risk  the  consideration  for  which  the  premium  or  money  was  put 
into  his  hands  fails,  and  therefore  he  ought  to  return  it.  IJ  nsk 
begin8,premium  not  returnable.— Another  rule  is,  that  it  the  risk  has 
once  commenced  there  ehall  be  no  apportionment  or  return  ot  pre- 
mium afterwards There  has  been  an  instance  put  of  a 

policy  where  the  measure  is  by  time,  which  seems  to  me  to  be  very 
strong,  and  that  is  an  insurance  upon  a  man's  life  for  twelve  months. 
There  can  be  no  doubt  but  the  risk  there  is  constituted  by  the 
measure  of  time,  and  depends  entirely  upon  it.  For  the  under- 
writer would  demand  double  the  premium  for  two  years  that  he 
would  take  to  insure  the  same  life  for  one  year  only.  In  such 
policies  there  is  a  general  exception  against  suicide.  If  the 
[*  81]  person  puts  *an  end  to  his  own  life  the  next  day,  or  month 
afterwards,  or  at  any  other  period  within  the  twelve  months, 
there  never  was  any  idea  in  any  man's  breast  that  part  of  the  pre- 
mium should  be  returned."  And  in  the  same  case,  Aston,  J.,  thui 
expressed  himself:  "The  sum  payable  and  the  time  were  both 
lumped" 

No  risk  no  premium. — The  premium,  if  paid  before  the  risk  begine, 
can  be  recovered  if  the  risk  insured  against  is  not  run,  whether  tho 
cause  of  its  not  being  run  is  the  fault,  will,  or  pleasure  of  the  in- 
sured (/ ).  For  \  he  risk  is  the  consideration  for  wh'  oh  the  premium 
is  to  bo  paid.  If  it  is  not  run  consideration  fails,  and  it  is  inequit- 
able that  the  insurer  should  receive  and  retain  the  price  of  running 
a  risk  when  in  fact  he  runs  none  ig). 

The  same  principle  is  also  expressed  when  it  is  said  that  pay- 
ment of  premium  oefore  risk  run  is  payment  sub  eonditione,  or 
deposit  or  money  with  the  insurer  to  answer  a  certain  event,  and 
that  the  money  paid  may  be  recovered  back  (if  the  condition  is  not 
satisfied  or  the  event  does  not  happen)  as  money  received  to  the 
use  of  the  assured  (h). 

Where  the  interest  insured  turns  out  to  be  less  than  the  amount 
insured,  there  shall  be  a  return  of  the  overplus  premium.  This  is 
a  custom  co-eval  with  the  contract  of  insurance  itself,  but  applies 
only  where  the  over-insurance  is  made  in  good  faith. 

Return  of  premium  where  several  policies. — Where  several  policies 
have  been'enected  in  good  faith  before  the  risk  begins  on  the  same 
subject-matter,  and  their  total  amount  exceeds  the  value  of  the  in- 
terest of  the  assured  in  the  whole  subject-matter,  there  must  Ix;  a 
return  of  premium  rateably  on  all  the  policies,  calculated  in 
[*  82]  such  a  way  as  to  reduce  the  *premium  on  each  policy  to  that, 

if)  Stevenson  v.  Snow,  8  Burr.  1237,  1  Wra.  Bl.  815.     Ti/iie  v.  Fletcher,  8 
Cowp  668.    Ronihv.  2'A«mp«ort,  11  East  426,  l3  Kast  428.    Jiermoit,  v    Wood- 
bridM,2  Doug.  781.     Stune  v.  Marine  Co.  1  Ex.  D.  Hi,  4:)  L.  J.  Kx.  «61,  34  L. 
T.  N.  S  490,  24  AV.  R.  554. 
■  ■  2Purk768{8th('d.). 

Martin  v.  iiitweU,  1  Shuwur  U>1,    Himuud  v.  JiojfUell,  1  Doug.  2U8. 
66 


THE  PREMIUM. 


*83 


proper  io  the  amount  actually  in  the  result  insured  by  or  payable 
under  that  policy  (i). 

Tills  is  a  furtlier  cons»quence  of  the  principle  that  if  the  property 
insured  never  comes  within  the  terms  of  the  written  contract,  the 
insurer  never  has  any  risk  (A). 

It  does  not  matter  whether  the  insurance  was  made  in  expecta- 
tion of  an  interest  or  in  over-estimation  of  the  value  thereof.  The 
ap]:)lication  of  the  contract  is  limited  to  the  amount  really  at  risk, 
and  if  the  premium  U  paid  upon  any  greater  amount,  or  any  other 
risk,  it  is  not  paid  fur  what  is  within  the  contract. 

Insurers  of  the  samo  interest  in  the  property,  moreover,  all  rank 
together,  since  they  all  contract  to  indemnify  in  respect  of  the'same 
interest  in  the  assured ;  and,  as  they  are  bound  to  contribute  propor- 
tionally in  case  of  loss,  they  ouglit  also  to  return  the  premiums 
proportionally  where  no  risk  attaches,  or  a  less  risk  than  that  con- 
templated (0. 

Where  the  insurance  is  in  expectation  of  interest,  and  it  turns 
out  that  the  assured  in  the  end  had  no  interest  at  all,  the  policy 
never  attached,  ancf  the  premium  is  repayable  (m). 

No  interest  return  of  premium. — When  the  policy  is  void  ab  initio^ 
without  any  fault  in  the  assured,  and  has  never  attached,  the  pre- 
mium is  returnable,  since  the  insurer  has  never  been  under  any 
liability  (n). 

These  questions  arise  rarely  in  fire  ami  life  insurance, *since,  [*  83] 
as  a  rule,  the  interest  in  sucn  cases  is  certainly  known  to  the      ' 
assured,  and  if  he  over-insures  there  is  suspicion  of  bad  faith. 

But  a  house  may  be  insured  in  the  mistaken  belief  that  it  is 
standing,  when  in  fact  it  has  already  been  burnt  down,  and  a  life 
ma^  ho  insured  in  belief  that  the  cestui  que  vie  is  still  living  when 
he  IS  in  fact  dead  (o) — in  both  of  which  cases  the  premium  must 
be  returned. 

If  risk  run,  premium  can't  be  recovered. — As  a  general  rule  the  right 
to  the  premium  is  indefeasible  when  the  policy  attaches  (p).  And 
when  the  risk  insured  against  has  once  begun,  the  premium  can- 
not be  recovered  back  by  the  assured  (g). 

The  risk  may  attach  only  in  part  or  only  to  some  separable  part 
of  the  subject-matter.  In  such  cases  the  risk  is  divisible  and  the 
whole  risk  is  not  run.  That  portion  of  the  premium  whicli  is  ap- 
portionable  to  that  part  of  the  subject-matter  to  which  no  risk  has 

(i)  Fi^k  V.  Mastennan,  8  M.  &  W.  105. 

(k)  Henkle  v.  Jioi/al  Exchange,  1  A'cs  Son .  a09. 

{I)  Goiiia  V.  London  Asuumnce,  1  liiur.  490.  Sou  also  Fisk  v.  Manlerman,  8 
M.  &  W.  105. 

(m)  liouthv.  Thompnon,  11  Ka.st  428. 

(m)  Furtailo  v.  Jtogerx,  3  B.  &  P   191 

(o)  Stone  V  Marine,  dr.,  Co.,  1  Kx.  D. 
490,  24  W.  It.  CM.    Seo  per  Araphlet*  B. 

(p)  Mosen  v.  Pratt,  4  Cuinp  297. 

{q\  Lowrif  V.  BovriUeu,  2  Doug.  468.  Tjfrie  v.  Fletcher,  Cowp.  008.  S/one  v. 
Marim,  Jkc.,  Co  ,  uhi  mpra, 

8Q 


Oom  V.  nniee.  12  Eust  220. 

81,  15  L.  J.  Ex.  801,  34  L.  T.  N.  S. 


*85 


THE  LAWS  OF  INSUnANCE. 


If 


II 


i 


attached  is  recoverable  (r).  But  if  the  whole  contract  is  one  and 
entire,  and  the  risk  has  once  commenced,  there  will  be  no  return  of 

^  As  regards  life  insurance,  it  was  eariy  laid  down  that  where  a 
policy  was  granted  containing  the  common  exceptions  of  suicide 
and  cleath  by  the  hands  of  justice,  if  the  party  commits  suicide,  or 
is  executed  within  twenty-four  hours  of  the  granting  of  the  policy, 
t.iere  shall  be  no  return  of  premium,  on  the  principle  that,  although 
the  death  was  caused  by  an  excepted  risk,  the  policy  was  operative 

so  far  as  regarded  the  risks  covered  by  it  (0- 
[*84]  *Insurer8  not  infrequently  stipulate  for  a  powei  t )  termi- 
minate  the  risk  at  any  time'during  its  currency,  upon  notice 
and  repayment  of  a  proportion  of  the  premium.  This  option  is 
probablv  taken  to  enable  them  to  write  off  risks  wh<  n  the  course 
of  their' business  during  a  particular  year  renders  it  prudent  to  do 
so,  or  to  enable  them  to  get  rid  of  a  liability  where,  after  insurance, 
they  find  grounds  for  suspicion. 

In  time  policies  no  apportionment  of  premium  or  risk  is  usually 
allowed  (x). 

This  rule  would  apply  crnisimUi  cam  to  insurance  other  than 
murine ;  but  such  contingencies,  though  conceivable,  are  rare. 

Divisible  risk  and  'premium. — Insurances  against  fire  are  usually 
mude  for  an  entire  antl  connected  portion  of  time  which  cannot  be 
severed,  and  the  premium  paid  as  a  j»rice  f -r  taking  the  risk  as  a 
whole.  The  doctrine,  therefore,  as  to  divisible  contracts  rarely  if  at 
all  applies  to  fire  insurance  iy).  But  vovAge  policies  c  in  be  made 
agaiiistfirefor  land  journevf,  and  insurancts  made  against  firo  within 
a  certain  locality  on  special  goods  (z).  And  if  fire  ))y  a  cause  not 
insured  against  occurrt  d  on  the  day  after  the  policy  oegan  to  run, 
the  at^sured  could  neither  rec«»ver  his  premium  nor  a  proportionate 
part  thereof  (a).  And  if  goods  or  house  insured  against  fire  are 
assigned,  the  premium  for  the  period  of  unexpired  risk  cannot  be 
recovered,  nor  tlio  benefit  of  the  policy  passed  (6).  The  fire  offices, 
however,  usually  do  equity  by  recognizing  the  as.-i<:nce  by 
[*85]  indorsement  on  the  policy  or  entry  in  the  insurers'  *book8. 
But  they  cannot  be  compelled  to  do  so  by  agreement  be- 
tween the  parties  (c). 

The  risk  on  life  is  divisible  to  a  certain  extent.    The  risk  in  cer- 

(r)  Stevenson  v.  Smm,  3  Burr.  1238,  1  Wm.  Bl.  315. 

is)  BermoH  v.  Woodbridge,  2  Doug.  781. 

(0  Ibid.  788. 

(x)  Loraine  v.  Thomliwon,  2  Doug.  685. 

(y)  Ellis  Ins  24.     Woodward  v.  Itepublic  Fire  Co.,  32  Hun.  365. 

(z)  Pearson  v.  Commercial,  1  App.  Cas.  498,  45  L.  J.  C.  P.  761,  88  L.  T.  N. 
8.  445,  24  W.  R.  951. 

(a)  Tyrie  v.  Fletther,  3  Cowp.  '666. 

(6  Sadlers  v.  Badcock,  2  Atkyns  554,  1  Wilson  10.  Lynch  v.  Dahell,  4  Bro. 
p.  C.431. 

(c)  Bank  of  New  South  Wales  v.  North  British  and  Mercantile,  8  N.  S.  W. 
iLaw  60. 

90 


{d)  J 

Cope  V. 

(«)  L 

68,  1)  B 

Q.  B.  I 

(./■) 

%{ 

i)  I 

k)  I 

1)1 

V.  Sun 

THE  PREMIUM. 


86 


tain  Isititudes  varies  from  that  in  others  for  certain  races  and  con- 
stitutions. If  a  policy  is  made  with  licence  to  go  into  a  region  of 
greater  risk  with  a  premium  proportioned  to  the  greater  risk,  if  the 
man  does  not  go  he  can  get  back  his  extra  premium,  and  he  is  not 
in  the  least  obliged  to  go  by  getting  the  licence. 

Whether  insurance  yearly  or  quarterly. — If  premiums  are  payable 
ytarly,  the  insurance  is  from  year  to  year;  if  they  are  paid  halt- 
yeurly  or  quarterly,  the  insurance  is  from  half-year  to  half-year  or 
quarter  to  quarter. 

Illegal  insurance.  Recovery  of  premium. — If  an  illegal  insurance 
be  effected,  the  parties  being  in  pari  delicto,  t*»o  asisured  cannot  in 
the  event  of  loss  recover  the  insurance  money,  nor  can  he  recover 
back  the  premiums  he  has  paid  {d).  If  the  risk  has  been  run  and 
no  loss  occurred,  the  assured  cannot  recover  back  his  premiums  (e). 
In  b<  (th  these  cases  the  contract  of  insurance  would  be  execute<l 
and  the  maxim  apply,  "In  pari  delicto  potior  est  conditio  possi- 
dentis." 

If,  however,  the  risk  has  not  been  run  and  the  contract  continues 
executory,  the  assured  may,  notwithstanding  the  illegality  of  the 
contract,  obtain  a  return  of  the  premiums  (/).  The  assured  should, 
however,  in  this  latter  case  give  notice  to  tlie  insurers  of  his  inten- 
tion to  abandon  the  contract  (g). 

^Return  of  premium  when  policy  illegai. — If  the  insurance  is  [*  86] 
legal  when  made,  but  becomes  illegal  by  the  effect  of  a  sub- 
sequent law,  both  parties  to  the  contract  are  discharged  and  the 
premium  is  returnable  {h). 

If  both  parties  contemplate  and  intend  to  enter  into  a  legal  con- 
tract, but  mistakenly  enter  into  a  contract  which  is  illegal,  the  in- 
sured can  recover  back  the  prerniuni  (i). 

If  the  contract  is  illegal  in  consequence  of  facts  not  known  to  the 
parties  at  the  time  of  its  making,  the  premium  is  recoverable.  Ig- 
norance of  fact  is  no  fault  (i). 

Non-ret^m  of  premiums  paid  under  invalid  policy.  But  company 
bound  to  grant  valid  policy. — Where  a  policy  Js  invalid  for  non-onni- 
pliance  with  the  terms  of  a  statute  regulating  the  mode  of  m  iking 
it,  it  was  held  in  Csmada  that  the  insured  could  not  get  back  his 
premiums  if  he  paid  with  knowledge  of  the  invalidity  {I).  ButtI  e 
company  were  held  bound  to  give  him  a  proper  policy,  and  in  a 


(d)  Allkins  v.  Jupe,  2  C.  P.  D.  376,  46  L.  J.  C  P.  824,  36  L.  T.  N.  S.  851. 
Cope  V.  Rowlands,  5}  M.  &  W.  1 49,  167.     Andree  v  Fletcher,  3  T.  R.  266. 

^e)  Lowry  v.  Bourdieu,  2  Doug.  468.  Patterson  v.  Powell,  2  L.  J.  C  P.  13, 
68,  \)  Bing  826,  620,  2  Mo.  &  8c.  39U,  773.  See  also  Herman  v.  Jeuchner,  15 
Q.  B.  D.  061. 

(/)  Lowry  V.  Bourdieu,  ubi  supra. 

(ff)  Palyart  v.  Leckie,  u  M.  &  S  290. 

(A)  Gruy  v.  Sims  (Am  ),  3  Wash.  C  C  276. 

li)  Uentigy.  Staniforth,  6  Muu.  &  S.  122,  1  Stark,  N.  P.  264. 

(A;)  Oom  v.  Bruce,  12  Eiist  2  5 

(/)  Perry  v.  Newcastle  District  Mutual  Fire  Co.,  8  U.  C  (Q.  B.)  863.  Wright 
V.  Hun  Mutual,  29  U.  C  (C  P.)  221. 

91 


o  \>.ii^< 


IMAGE  EVALUATION 
TEST  TARGET  (MT-3) 


.<i. 


<^.% 


m/* 


^< 


W 
^ 


"^ 


1.0 


I.I 


no 


^  Uii   12.2 


Ui 


IL25  i  1.4 


Photographic 

Sciences 

Corporation 


4s  %  S 


33  Wnr  MAIN  ITMIT 

WIIITM.N.Y.  14SI0 

(7U)l73-4503 


'4^ 


^ 

i^. 

^\^ 


%0 


\ 


*88 


THE  LAWS  OF  INSURANCE. 


il!  N!,: 


I    i 


m 


I 


later  caae  the  Supremo  Court  of  Canada  has  held  it  a  fraud  to  set 
up  the  want  of  a  seal  as  an  answer  to  an  action  on  a  j)olicy  where 
the  insurers  were  by  their  constitution  only  permitted  to  contract 

under  seiil  (w).  .  .  ^       .    . . 

Premium  returnable.— "^^ here  the  name  of  the  person  interested  in 


in  such  a  lusc  (i).  as  the  polic>  never  attaches. 
[*87]     *Recov^v  J  premiums  by  creailor  over-insuring. -r-ln  Lower 

Canada  a'c..\  ''tor,  who  in  good  faith  over-insured  his 
debtor's  life,  was  h/.a  eiilitled  to  a  return  of  premiums  as  to  the 
excess,  there  having  beta  no  intention  to  defraud,  but  only  a  mis- 
take as  to  law  (r). 

Effect  ojfraitd  on  return  of  premiums— FremmmB  paid  on  an  as- 
Buraijce  oidaiiied  by  actual  fraud  on  the  part  of  the  assured  or  his 
agent  cannot  be  recovered  back.  Tiie  insurer  thus  gains  one  or 
more  premiums  by  an  unsuccessful  attempt  to  defraud  him,  and 
the  apsured  is  to  that  extent  fined  for  his  fraud ;  but  to  let  the  in- 
sured recover  his  premium  would  allow  him  to  allege  his  own  wrong 
as  a  ground  of  relief  («). 

Altering  the  policy  by  adding  words  which  would  materi  ally 
change  its  effect  will  amount  to  fraud  and  have  the  same  result  (t). 
Equity,  however,  will  only  decree  the  delivery  up  ot  a  fraudu  eiit 
and  therefore  void  policy,  when  the  insurer,  si  eking  relief,  oflfera 
either  to  repay  the  premiums  paid,  or  to  submit  to  an|  terms  which 
the  Court  may  think  fit  to  impose  in  granting  such  relief,  which  will 
include  the  repayment  of  premiums.  To  hold  otherwise  would  be  to 
let  the  insurer  affirm  and  deny  the  contract  in  one  breath  {u).  And 
this  rule  is  applied  even  in  cases  of  gross  fraud  or  crime  on  the  part 
of  the  assured ;  thus  in  Prince  of  Wales  v.  Palmer  the  assured  effected 
a  policy  in  his  brother's  name  and  on  his  brother's  life,  and  was  de- 
clared by  a  coroner's  jury  to  have  poisoned  his  brother.    Under 

these  cirt  umntances  the  policy  wan,  at  the  suit  of  thfe  insurers. 
[*88]  of  couiSH  declared  void ;  but  the  insurers  were  *not  allowed 

to  retain  the  premiums,  which  were  ordered  to  be  applied  iu 


(m)  Londm  Life  Co.  v.  Wright,  ft  Cumula  (S.  C.)  407. 
n)  HoUsoH  V.  Olmrver,  8  E.  &  B.  40,  2«  L.  J.  Q.  li.  808,  20  L.  T.  278,  3  Jur 
N.  S.  1125,  6W.  11,  712. 

(o)  Vollctt  V.  Morrison,  9  Huie  M12,  21  L.  J.  Ch.  87!!. 

{p)  JJowker  v.  Canada  Life,  24  U  C.  (Q  11  )  G!H. 

(q)  Wainwiiaht  v.  Jiland,  1  M.  &.  R  481,  1  M.  &  W.  ;12,  5  L.  J.  N.  S.  Kx. 
147. 

(»•)  Lapierrey,  hmdonand  Lanroiihin;  Life  Co.  (1877),  2  StuvoiiH  Quebec 
Dig.  m). 

(x)  Chapman  v.  tVam',  Piirk  4M\.     Taylor  v.  Cheater,  L.  H.  4  Q.  l\.  'M). 

(t)  Langhom  v.  Cologun  4  Tuuiit  !J150. 

(m)  l)e  Costa  v.  Seandret,  2  P.  Wm».  170,  per  Miicclesfield,  C.  (l«8it}.  Whit- 
tinyham  v.  Thornborough,  2  \vn\,  206,  Prec.  Ch.  20.  Barker  v.  Waltern,  8 
Boav.  U2,  00,  per  Lord  Luiigdule. 

92 


THE   PREMIUM. 


*89 


payment  of  the  costs  of  all  parties,  and  the  residue  paid  into  Court 
>vitli  liberty  to  anply  (x). 

Poiiq^  cancelled.  Return  of  premium. — On  the  pamo  principle,  in 
the  case  of  a  policy  of  life  insurance  which  had  bern  obtained  by 
liaud,  the  first  underwriter  being  simply  a  decoy  duck  to  induce 
other  persons  to  sign,  the  policy  was  set  aside  at  the  suit  of  the  in- 
surer, with  costs,  and  the  premium  received  on  tlie  policy  was  di- 
reted  to  go  in  part  payment  of  the  costs  (y);  and  where  a  merchant, 
iiaving  heard  that  his  ship  was  in  danger,  insured  her  without  dis- 
closing to  the  insurers  what  intelligence  he  had  received.  Lord 
Macclesfield  held  that  the  concealing  of  this  intelligence  was  a 
iraud,  and  decreed  the  policy  to  be  delivered  up  with  costs,  but  the 
premium  to  be  paid  back,  and  allowed  out  of  the  costs  (2). 

Return  of  premium  where  misrepresentation. — Where  a  policy  is 
avoided  by  concealment  or  by  misrepresentation  not  fraud  ulent, 
the  assured  is  entitled  to  a  return  of  the  pn  mium.  The  policy  is 
itself  conclusive  evidence  that  the  insurers  have  received  the  pre- 
mium (a). 

Form  of  order. — The  form  of  an  order  setting  aside  a  void  con- 
tract of  insurance,  the  insurers  returninjj^  the  premiums,  is  as  fol- 
lows : — "  The  i)laintiffs  (the  company)  being  willing,  and  hereby  oif- 
ftring  to  return  the  premiums,  declare  that  the  acceptance  by  the 
plaintifi's  of  the  defendant's  life  was  void  and  of  no  effect,  that  they 
were  not  bound  to  deliver  the  policy,  and  that  the  contract  be  de- 
livered up  to  be  cancelled  "  (6). 

^Fraud  of  insurer.  Return  of  premium. — A  premium  paid  on  [*  89] 
an  insurance  obtained  by  fraud  on  the  part  of  the  insurer 
may  be  recovered  by  the  assured  (c).  In  Carter  v.  Boehm,  Lord 
Mansfield  well  observes  that  the  principle  on  which  this  rule  rests 
governs  all  contracts  and  dealings.  "  G ood  faith  forbids  either  part  y , 
l-y  concealing  what  he  privately  knows,  to  draw  the  other  mto  a 
bargain  from  his  ignorance  of  that  fact,  and  his  believing  the  con- 
trary." 

Parties  not  in  pari  delicto. — So  also  the  premium  is  rccover.ible 
when  the  contract  is  illegal  and  the  insurer  is  nioru  in  the  wrong 
than  the  assured,  the  parties  not  being  in  pari  delicto  (d). 

Premiums  forfeited  where  so  agreed.— iho  insurers  may  and  usually 
do  stipulate  as  one  of  the  terms  on  which  they  will  insure,  that  in 
certain  events  («.  g.,  in  case  of  any  untrue  statement  by  the  assured) 


(a;^  Prince  of  Wales  Co.  v.  Palmer,  25  iVeiiv.  f.05. 

/) 


(y)   Whittmqham  v.  Thornbnrminh,  2  Veru.  20(1,  Prec.  Ch.  20. 
(«)  De  Cmt'a  v.  Srandret  2  P.  Wiuh.  !(»!).     Soe  Duckett  v.    Williams,  2  Cr.  & 
M.  848,  »L.  J    N.  8    Ex   141. 

(a)  AiiilersoH  v.  Thornton,  8  Ex.  425.     Feiae  v.  J'arkinson,  4  Tuuiit.  040. 
New  York  Life  v  Fletcher,  10i)uviH  (Sun.  Ct.  U    S.)  filH. 

(b)  Luudoii  Asmrance  v.  Afansell,  11  Ch.  D.  372,  48  L.  J.  Ch.  uai,  27  W.  K. 
444 

(c)  Carter  y  Jioehm,  8  Burr.  1909.    Duffellw.  Wilson,  1  Camp.  401. 

(a)  Tjovry  v.  liourdieu,  2  Doug.  472,  nor  Lord  Mauafield.     iJowkcrv.  Canada 
Life,  24  U.  C.  (Q  B)  091. 

03 


m 


l''h 


^hl 


m 


*91 


THE  LAWS  OF  INSURANCE. 


I  111 


I       '  !: 


i!' 


the  premiums  paid  shall  he  forfeited.  When  the  parties  have  thue 
contMcted  atnl  the  prescribed  events  happen,  the  premiums  which 
the  assured  has  paid  cannot  be  recovered  back  by  him  even  though 
the  untrue  st  itement  shall  have  been  made  quite  innocently  (e). 

Such  stipulation  is  made  by  way  of  condition  in  the  policy. 
The  events  usually  stipulated  for  are  "avoidance  of  the  policv  by 
any  untrue  or  incorrect  statement  ia  the  declaration,  or  breach  of 
warranty,  or  condiiion."  ,,.  .      ,         .  „r. 

Assured  canH  compel  insurer  to  accept  additional  premiums. — Where 
the  rislc  has  been  insufficiently  disclosed,  or  misrepresented,  or 
materially  altered  or  varied  during  the  contract,  the  insured  has  no 
right,  either  legal  or  equitable,  in  the  absence  of  any  special  stipu- 
lation in  the  policy,  to  compel  the  insurer  either  to  take  an 
[*  90]  enhancedpremiumor  to  return  any  portion  of  the  *premium 
paid.  Nor  can  he  in  case  of  a  loss  recover  the  policy -moneys 
on  the  tender  of  the  premium  usually  charged  by  the  insurer  on  the 
actual  risk  run.  Such  conduct  or  events  entitle  the  insurer  to  en- 
force a  forfeiture  or  to  waive  it  at  his  own  option  (/). 

Amx)unt  of  premium,  evidence  of  materiality. — When  questions  arise 
ns  to  the  materiality  of  facts  not  disclosed,  the  amount  of  premium 
which  would  have  been  charged  on  a  risk,  including  these  facts,  is 
evidence  to  show  that  knowledge  of  the  facts  would  have  been  ma- 
terial or  immaterial  to  the  insurer  (^). 

It  seems  that  if  a  premium  be  paid  to  the  agent  of  an  insurer  in 
respect  of  a  contract  known,  or  which  ought  to  be  known,  to  be 
outside  the  scope  of  his  agency,  it  is  not  recoverable  from  the  in- 
surer (h). 

Excess  of  authority  by  agent  return  of  premium. — It  may  be  observed 
that  if  the  insurer  receives  the  premium  from  his  agent  with 
knowledge  of  the  nature  of  the  insurance  effected,  he  ratifles  such 
contract,  except  in  certain  cases,  in  which  the  insurers  are  corpora- 
tions with  limited  powers,  and  such  ratification  is  idtra  vires.  But 
even  there  profit  by  an  ultra  vires  act  is  unconscientious,  and  the 
assured  can  maintain  an  action  for  the  premiums,  and  if  the  insur- 
ance company  is  in  liquidation  may  prove  tor  the  same  (t). 

If  a  policy  be  issued  in  fraud  of  the  insurance  company,  the 
company  would  be  bound  to  account  to  the  assured  for  any  benefit 

derived  from  the  premiums  (k). 
[*  91]     *Return  ofpremiumbyagreement—Agreementsmay  be  made 

(e)  Anderson  v.  Fitzgerald,  4  H.  L.  C.  484.  17  Jur.  003.  Thomson  v.  Weems, 
0  App.  Cas.  671, 082.     Durkett  v.  WUliams.Z  L.  J.  N.  S.  Ex.  141,  2  Cr,  &.  M.  ;J4«. 

If)  Sean  v.  Agricultural,  H2  U.  C.  (C.  P.)  686. 

ih)  Re  Universal  Non-Tariff  Co.,  Forbes'  claim.  10  Eq.  486,  44  L  J.  Cl».  7«1. 

^^  yj^\.i^^'    ■''""'^"  "   Pander,  L  R.  0  Q  B  631,  43  L.  .1.  N.  8.  Q   B.  227 

1*^  ■'  1'  ^\.%.  "*';  i^  ^-  ^'  ^'  ^if''^^'  ''•  Dun^ord,  14  East  404.  Lynch  v. 
JIamiltun,  i)  Tumit  37.  ^ 

Ih)  De  Winton's  Case.  84  L.  T.  042. 

(»■)  Burgess  and  Stock^s  Case,  2  J.  &  H  441,  81  L.  J.  Ch.  740,  10  W.  R  810. 

(A.)  Athenasinn  Life  Insurance  Co.  v.  Iholeu,  8  Do  O.  &  J.  204.  28  L  J.  Ch. 

878,  0  W .  R.  866.    Brown's  claim,  10  W.  R.  (M2. 
94 


THE   PREMIUM. 


*92 


for  return  of  a  part  of  the  premium  in  certain  events  or  on  the 
doing  by  the  assured  of  certain  things.  Such  agreements  when 
made  are  to  be  construed  by  the  Court.  By  them,  if  the  insurer  is 
given  a  discretion  to  return  the  part,  the  Court  will  not  interfere 
with  the  exercise  of  such  discretion  by  the  insurer  or  his  agents  if 
reasonably  exercised  {t). 

In  the  absence  of  such  a  discretionary  power  reserved  by  the 
contract,  the  insurer  will  be  bound  to  return  the  premium  on  the 
occurrence  of  the  events  or  doing  of  the  things  specified. 

Policy  at  variance  mthpropoacUa.  Return  of  premium. — Where  the 
policy  does  not  accord  with  the  proposals,  there  is  no  contract,  and 
consequently  the  pi'emium  if  paid  must  be  repaid  (m),  unless  the 
variance  is  the  result  of  mutual  mistake,  in  which  case  the  policy 
may  be  rectified. 

Premiums  mmt  be  paid  punctually. — Where  it  is  stipulated  that 
premiums  shall  be  paid  by  a  certain  date,  they  must  bo  so  paid  or 
the  policy  is  voidable'  at  the  election  of  the  insurers  (n),  who  may, 
however,  waive  the  forfeiture,  but  are  under  no  equitable  obliga- 
tion to  do  so,  upon  tender  of  the  premiums  due  (o). 

If  an  agent  is  designated  as  receiver  and  is  changed,  delay  due 
to  such  change  not  notified  to  the  assured  will  not  create  a  forfeit- 
ure (p). 

So  also  if  a  foreign  company  gives  up  its  office  in  *the  [*  92] 
domicile  of  the  assured,  and  has  no  legally  constituted  agent 
there  (9). 

Who  to  pay  premiums. — Payment  of  premiums  must  be  made  by 
the  assured  or  by  his  authorized  agent.  Payment  by  the  volunteer 
is  not  performance  of  the  condition  in  a  policy  (r). 

Whether  demand  requisite. — The  insurer  need  not  demand  the  pre- 
miums, and  if  the  insured  does  not  receive  the  usual  notice'  that  a 

(l)  Manhy  v.  Oresham  Life  Co.,  0  Beav.  439,  81  L.  J.  Ch.  94,  4  L.  T.  N.  S. 
847,  9  W.  R.  547,  7  Jur.  N.  8.  883, 

(m)  Fowler  V.  Scottish  Equitable  Co.,  4  Jur.  N.  S.  1169,  28  L.  J.  Ch.  226,  7 
W.  R  5,  82  LT.  119. 

(»)  See  KleinW.  New  York  Life,  104  U  S  (14  Otto)  88  (Sup.  Ct.  U  S.),  and 
Thompson  y.  Insurance  Co.,  104  U,  S.  (14  Otto)  252.  Phaamx  v.  Sheridan,  8 
H.  L.,0.  745,  81  L.  J.  Q.  B  91,  7  Jur.  N.  S.  174,  8  L.  T.  N  S.  f>04. 

(0)  Cotton  States  V.  Lester,  85  Am.  Rep.  122,  and  cases  in  notes  thereto. 
Thompson  v.  Insurance  Co.,  14  Otto  (104  U.  S.  258 

(p)  Insurance  Co  v.  EgglesUm,  96  U.  S  (0  Otto)  572.  Seaman^s  Co.  v  JV. 
W.  Ins.  Co.,  1  McOrajr  (U  S.  Circ.  Ct )  608. 

(q)  Dorian  v.  Positive,  28  Lr.  Can.  Jur.  261. 

(r)  IVMting  v.  Massachusetts  Cc  129  Mass.  240  See  also  Falcke  v.  Scottish 
Imperial  Co.,  84  Ch.  D.  884. 

^he  fact  that  one,  when  his  life  insurance  premitim  becnmn  due,  was  so  sick 
and  delifious  until  he  died  that  he  could  do  nothing;  about  it.    Held,  not  a  case  of 
impossibility  cause  bv  act  of  Ood,  such  us  to  prevent  a  forfeiture.     Carpenter  v. 
Centennial  Mut  L^e  Asso.,  68  Iowa  458. 

'If  uniform  practice  of  life  insurance  company  has  been  to  notify  insured  of  amount 
due  on  his  prenium  notes,  it  cannot  enforce  forfeiture  stipuliited  for  in  policy  in 
case  of  his  failure  to  pay  promptly,  where  it  fails  to  give  him  thu  usual  notice. 
Manhattan  Life  Ins.  Co,  v.  Smith,  ii  Ohio  St.  ISO.  Alexander  v.  Continental 
Im  Co.,  67  Wii.  423. 

06 


/I ' 

''(ti 

mm 


93 


THE  LAWS  OF  INSURANCE. 


"■'     ' 


n  1 


premium  U  dm:,  and  confequently  oralis  to  pay  within  the  days  of 
grace,  lio  li  w  no  equity  to  recover  on  a  policy  whicU  lias  lapsed  or 
or  b»en  forfeited  by  the  default,  though  such  omission  as  aforesaid 
has  i)een  purely  accidental  and  in  no  sense  intentional  («). 

But  u  company  cannot  set  up  the  failure  of  Ihe  deceased  to  pay 
premiums  as  a  defence  to  an  action  upon  the  policy,  where  fronx 
the  course  of  dealing  between  the  parties  the  assured  had  aright  to 
believe  that  notice  would  be  given  to  him  of  the  amount  due  when 
the  compauy  required  it  to  oe  paid,  and  that  a  receipt  therefor 
would  be  sent  to  the  bank  (0- 

Days  of  grace.— When  an  insurance  extends  over  a  period  of  time 
during  which  more  than  one  premium  will  become  payable,  a  cer- 
tain number  of  days — called  days  of  grace — thenumbe*'  of  which  is 
usually  fifteen,areallowed beyond thedueday for ther  /mentofthe 
premiums.  If  a  loss  happen  during  these  days  of  grace  and  whilst 
the  premium  is  unpaid,  the  assured  will  have  no  right  of  action 
(except  by  express  stipulation)  for  the  amount  of  the  policy.*  The 
legal  effect  of  the  days  of  grace  is  not  1o  entitle  the  assured  to  re- 
cover for  a  loss  during  those  days  whilst  the  premium  is  un- 
[*  93]  paid,  but  to  enable  the  insur  mce  to  be  *renevved  and  save 
tlie  expense  of  a  new  policy  and  fresh  stamps  (u). 

tiffed  of  days  of  grace  is  to  give  time  to  renew  policy.  Insurer  may 
terminate  insurance  at  end  of  year  notwithstanding  days  of  grace. — In 
giving  judgment  for  the  defendants  in  Tarleton  v.  Slaniforthy  Lord 
Kenyon  said :  "No  policy  is  to  have  existence  until  the  premium 
is  paid  by  one  party  and  accepted  by  the  other.  In  this  case  the 
loss  unfortunatelv  happened  in  that  interval  of  time  when  it  was 
in  suspense  whether  or  not  the  policy  would  be  renewed ;  for  tit 
that  moment  the  plaintiff  had  not  offered  to  nay,  and  of  course  the 
trustees  had  not  accepted,  the  premium  for  the  next  half-year.  I 
am  therefore  clearly  of  opinion  that  the  defendants  are  not  liable*' 

This  decision  was  pronounced  on  the  4th  July  1794,  and  in  con- 
sequence of  it  the  Sun  Fire  Office  on  the  10th  of  the  same  month 
puhlished  in  the  public  newnpapers  an  advertisement  stating  that 
"all  persons  insured  in  this  office  by  ]»olicies  taken  out  for  one  year 
or  for  a  longer  term  are  and  always  have  been  considered  by  the 
managers  as  insured  for  fifteen  days  beyond  the  time  of  tlie  expira- 
tion of  their  policies."  Afterthis  advertisement  one  Salvin  effected 
a  p.ilicy  and  paid  the  premium,  but  before  the  expiration  of  the 

(it)  Windm  v.  Tredegar,  15  L.  T.  N.  S.  108  (H.  L.).  Thompnon  v.  Insuranct 
Co.,  104  U  8.  (14  Otto)  252. 

(/)  Attorney-General  \,  Continental  Lij\  80  Hun  (N.  Y.  138 

(11)  Tarleton  v.  Stani/orth,  5  T.  R.  005.     Want  v.  Bttint,  12  Eust  188. 

(«)  Tarleton  v.  Stanifnrth,  5  T  R.  00.1. 

"Where  a  policy  does  not  ntipulate  that  failure  to  nay  noto  when  duo  ahull  nvoid 
policy,  mid  where  extension  huH  been  granted,  and  death  occurw  before  expiration 
of  tune  us  extended,  policy  is  itot  uvoidod.  KamM  I'roteotiot  Union  v.  WhiUt 
80  Kan.  760. 

96 


THE  PREMIUM. 


*9S 


year  the  office  gave  him  notice  that  unless  he  agreed  to  pay  an  in- 
creased premium  they  would  not  continue  the  insurance.  To  this 
the  assured  refused  to  accede,  and  his  premises  were  destroyed  by 
accidental  fire  after  the  expiration  of  the  current  year,  but  within 
the  fifteen  days.  The  policy  had  been  effected  subject  to  the  fol- 
lowing article : — "  On  bespeaking  policies  all  persona  are  to  make  a 
depv  sit  for  the  policy  stamp-duty,  and  shall  pay  the  premium  to 
the  next  quarter-day  and  from  thence  for  one  year  more  at  least ; 
and  shall,  as  long  as  the  managers  agree  to  accept  the  same, 
make  all  future  payments  annually  at  the  *said  office  within  [*94] 
fifteen  days  after  the  day  limited  by  their  respective  policies, 
upon  forfeiture  of  the  benefit  thereof;  and  no  insurance  is  to  take 
place  until  the  premium  is  actually  paid  by  the  insured,  his,  her, 
or  their  agent  or  agents."  When  the  lo's  happened,  the  plaintiff 
had  not  paid  or  tendered  the  premium  for  another  year,  and  the 
office  resisted  his  claim.  Lord  Ellenborough,  in  giving  judgment 
against  the  plaintiff,  said :  "  The  effect  of  the  article  and  advertise- 
ment is  to  give  the  parties  an  option  for  fifteen  days  to  continue  the 
contract  or  not,  with  this  advantage  on  the  part  of  the  assured,  that 
if  a  loss  should  happen  during  the  fifteen  days,  though  he  have  not 
paid  his  premium,  the  office  shall  not  after  such  loss  determine  the 
contract,  out  that  it  shall  be  considered  as  if  it  had  been  renewed; 
but  this  does  not  deprive  them  of  the  power  oF  determining  the 
contract  at  the  end  of  the  term,  by  making  their  option  within  a ' 
reasonable  tinie  before  the  end  of  the  period  for  whVsh  the  insur- 
ance was  made.  Where  the  premium  is  received  the  effect  of  it  is 
to  give  the  assured  an  assurance  for  another  year,  to  be  computed 
from  the  expiration  of  the  first  policy,  and  not  from  the  expiration 
of  the  following  fifteen  days.  The  office  cannot  determine  the 
policy  after  the  year  during  fifteen  days  of  the  following  year  in 
case  a  loss  should  happen  during  that  period.  But  the  office  has 
the  power  at  any  time  during  the  year  of  saying  to  the  assured, 
'We  will  not  contract  with  you  again,  wa  will  not  receive  from  you 
the  premium  for  another  year;'  and  by  such  declaration  the  object 
would  cease  for  which  the  fifteen  days  were  allowed,  and  as  no  pre- 
mium would  be  in  such  case  to  be  received,  no  indemnity  could  be 
claimed  in  respect  of  it.  The  consideration  for  the  indemnity  dur- 
ing the  fifteen  days  is  the  premium  which  must  be  paid  during  that 
period,  but  when  that  cannot  be  any  longer  looked  to  or  expected, 
the  right  to  the  indemnity  determines  also''  (y). 

^Payment  of  overdue  premium,  insurer  and  inmred  being  igno-  [*  95] 
rant  that  life  hm  dropped. — Payment  of  premium  after  it  is 
overdue,  and  after  the  death  of  the  life,  of  which  both  the  insurer 
and  the  insured  were  unaware,  will  not  rehabilitate  the  insurance 
80  as  to  entitle  the  insured  to  the  policy  money  (z). 


(y)  Salvin  v.  Jatnea,  0  East  671. 

(«)  Prikharda  v  Merchants',  A'c,  Co  .  3  C.  B.  N.  8.  622,  27  L  J.  C,  P.  189, 
80  L.  T.  818,  2  Jiir.  N.  S.  807,  0  W.  R.  840. 


7  PORTER  ON  IMBURANCfi. 


97 


*96 


THE  LAWS  OF  INSURANCE. 


i£ 


Acceptance  by  agent  of  premium  after  days  of  grace.— TYie  local  agent 
of  an  insurance  company  has  no  authority  to  bind  the  company 
by  the  acceptance  of  the  premium  after  the  days  of  grace  have 

expired.  .  ,     , 

DebUing  agent  with 'premium— yi&ee  Aehiimg  the  agent  with  the 

premium  by  the  company  is  not  equivalent  to  a  payment  to  the 

company  by  the  assured  (a). 

Acceptance  of  premium  by  agent  after  days  of  grace. — Acceptance  of 
the  premium  bv  the  agent  after  the  fifteen  days,  and  debiting  the 
game  to  him  in  the  company's  books,  will  not  amount  to  evidence 
of  a  new  agreement  between  the  company  and  the  assured  (6). 

Promise  by  agent  to  pay  premium. — A  promise  by  the  treasurer  of 
an  insurance  company  to  see  the  premium  paid  does  not  bind  the 
company,  for  he  cannot  pay  them  out  of  their  own  funds,  and  if 
he  agrees  to  pay  out  of  his  own  pocket  the  remedy  of  the  assured 
would  be  against  him  and  not  against  the  company  if  he  failed  to 
do  80  (c). 

What  amaunis  to  payment  of  premiums.  Cross  accounts. — Where  two 
insurance  companies  had  cross  accounts,  or  insurances  mutually 
granted,  and,  by  their  course  of  dealing,  premiums  due  on  policies 
effected  by  one  company  with  the  other  were  not  paid  in  cash,  but 
a  receipt  was  given  for  each  premium  as  if  so  paid  within  the  time 
limitea  for  the  payment,  and  the  premiums  were  entered  as  paid 
in  the  accounts,  the  accounts  were  settled  from  time  to  time,  the 
balance  struck,  and  payment  m  i  de  of  the  balance.  A  recei  pt 
[*  96]  was  thus  *given  for  a  premium  on  a  f>olioy  effeced  by  plain- 
tiffs with  defendants  within  the  time  for  payment,  and  the 
amount  was  enterel  in  account  as  paid  by  the  plaintiffs.  After  the 
time  for  payment  had  elapsed,  but  before  the  next  settlement  of 
the  current  account,  the  life  died.  It  was  held  that  there  had  been 
a  payment  of  the  premium  sufficient  to  keep  the  policy  alive  (d). 

And  where  the  agents  of  an  insurance  company  remitted  to  the 
company  £100  "for  premiums,"  such  sum  being  in  excess  of  the 
amount  due,  and  the  company  had  been  urging  the  agents  to  renew 
certain  lapsed  policies,  the  contracts  regardmg  which  had  been  ar- 
ranged, it  was  neld  that  although  the  company  did  not,  in  their 
books,  specifically  appropriate  anv  part  of  the  £100  to  the  renewal 
of  the  lapsed  policies,  they  must  oe  taken  to  have  received  the  ex- 
cess part  of  such  sum  in  respect  of  them  («). 

Last  premium  due  before  death  not  paid.  Policy-money  paid  by  mis- 
take.—Mr.  Solari  effected  a  policy  of  insurance  on  his  life  with  the 

(a)  Frazer  v.  Oore  District  Co.,  2  Ontario  Rep.  416. 

(6)  Atey  v.  Fernie,  7  M.  &  W.  151,  10  L.  J.  Ex.  9.  Busteed  v.  Went  of  Eng- 
tenrf,  6  Ir.  Ch.  558.  ''       ^ 

(c)  litiffum  V.  Lafayette  Mutual  Fin,  85  Mass.  (3  All.)  8eO. 
(rf)  Prince  of  Waleit  Asmrauce  Co  v.  Harding,  1  E,  B  &  E.  183  27  L  J.  Q. 
B.  N.  8.  297,  i  Jur.  N.  S.  851.    Busteed  v.  West  of  England  Co,  5  Ir.  Ch.  518. 
(e)  Kirkpatrick  v.  South  Australian  Insurance  Co.,  1 1  App.  Cos.  177. 

•ft 


THE  PREMIUM. 


*98 


Argus  Insurance  Company,  and  died  without  having  paid  the  last 
premium.  The  actuary  of  the  company  informed  two  of  the  di-' 
rectors  that  the  policy  had  lapsed  by  reason  of  the  non-payment  of 
the  premium,  and  one  of  such  directors  wrote  on  the  policy  in 
pencil  the  word  "lapsed."  Subsequently,  however  the  insurance- 
money  was  paid  to  the  executor  of  Mr.  Solari,  the  directors  who 
drew  the  cheque  having  forgotten  the  lapse  of  the  policy.  Lord 
Ab'nger,  in  giving  judgment,  said:  "If  the  party  taakes  the  pay- 
ment with  full  knowledge  of  the  facts,  although  under  ignorance  of 
the  law,  there  being  no  fraud  on  the  other  side,  he  (tannot  recover 
it  back  again.  There  may  be  also  cases  in  which,  although 
he  might  by  investigation  *iearn  the  state  of  facts  more  ac-  [*  97] 
curately,  he  declines  to  do  so,  and  chooses  to  pay  the  money 
notwithstanding.  In  that  case,  there  can  be  no  doubt,  he  is  equally 
bound.  Then  there  is  a  third  case,  where  the  party  had  once  a  full 
knowledge  of  the  facts,  but  has  since  forgotten  them.  I  think  the 
knowledge  of  the  facts  which  disentitles  the  party  from  recovering 
must  mean  a  knowledge  existing  in  the  mind  at  the  time  of  pay- 
ment" (g). 

Insunince  "  lost  or  not  loaV  No  return  of  premium. — When  the 
risk  is  undertaken  in  any  event,  whether  the  thing  to  be  insured  is 
lost  or  not  lost,  burnt  or  not  burnt,  living  or  dead,  the  risk  is  based 
on  the  uncertainty  in  the  minds  of  assurer  and  assured,  and  no  re- 
turn of  premium  can  be  had,  except  for  fraud  of  the  insurer,  since 
Ihe  policy  attaches  (when  made)  irrespectively  of  the  condition  of 
the  subject-matter,  such  a  policy  being*  grounded  on  ignorance  of 
both  parties  as  to  the  state  of  the  thing  insured,  instead  of  on, 
knowledge  of  its  safety  and  soundness  {h). 

Premiums  not  apportinnnble. — Premiums  are  especially  excepted 
from  the  operation  of  the  Apportionment  Act,  1870  (t),  wnich 
enacts  that  "nothing  in  this  Act  contained  shall  render  apportion- 
able  any  annual  sums  payable  in  policies  of  assurance  of  any  de^ 
script  ion." 

Refusal  to  receive  premiums.  Remedy. — Refusal  to  receive  pre- 
miums after  the  risk  has  been  accepted  is  ground  for  action  for 
damages  ik),  and  it  would  seem  that  an  action  will  lie  for  specific 
performance  of  a  contract  to  insure  or  grant  a  policy  (I)  or  for  a 
declaration  that  there  is  a  valid  and  subsisting  insurance. 

*  Where  policy  ultra  vires  premium  must  be  returned. — Where  [*  98] 


(g)  KeVy  v.  Solari,  9  M.  &  W.  64, 

(A)  Giffard  \.  Quern  Insurance  Co  ,  1  Han.  (New  Bruns.)  482,  489,  per  Ritchie, 
C  J.,  HOW  C.  J.  ot  Supreme  Court  of  Canada. 
(f )  aa  &  34  Vict.  c.  35,  8.  0. 

(k)  M'Kie  V.  Phfxnix,  28  Missouri  383,  Dai/  v.  Connectiait  Co.,  45  Conn. 
480, 

(I)  Ijinf,ml  V.  Provincial  Hor.se  and  Cattle,  <fcc,,  Co  ,  34  Bcav.  201,  10  Jur.  N. 
S.  10(iO,  ii  L,  T.  N.  S.  »:  0,  5  N.  11  29.  Penley  v.  Beacon,  Jbc.  Co.,  7  Grant  (U. 
G)  130.    JJajf  V.  Connecticut  Co.,  45  Cuun.  480. 

99 


*98 


THE  LAWS  OF  INSURANCE. 


a  contract  of  insurance  is  tUtra  vires,  the  would-be  insurer  can  only 
exonerate  himself  from  liability  under  such  a  contract  by  repaying 
tiie  premiums  which  he  has  eained  by  the  contract  (m). 

Such  a  case  arises  where  the  policy  is  made  wH^h  a  corporation 
whose  powers  are  limited  by  statute,  charter,  articles  of  association, 
or  otherwise,  and  such  powers  are  exceeded. 

(to)  Re  Phcenix  Co.,  Burgess  and  Stock^s  Case,  2  J.  A  H.  441,  81  L.  J.  Ch. 
749,  10  W.  R.  816. 


100 


THE  RIHK. 


*100 


♦CHAPTER  IV. 


[*99] 


THE  RISK. 

Fhing  the  premium. — The  moet  important  part  of  insurance  is 
determination  of  the  i^sk.  The  insurer  can  only  adjust  his  pre- 
mium profitably  if  he  knows  accurately  the  nature  of  the  risk 
which  he  is  asked  to  take  upon  himself;  and  the  assured,  if  he 
withholds  from  the  insurer  any  necessary  data  for  estimating  the 
nature  of  the  risk,  which  he  ought  to  have  supplied  to  the  insurer, 
will,  when  a  loss  occurs,  find  that  he  has  been  insured  only  in  name, 
and  that  by  his  own  inarlvertency  he  loses  not  only  his  property 
but  probably  also  his  premiums  (a).  For  the  rule  that  the  utmost 
good  faith  must  be  observed,  which  is  peculiar  to  this  contract,  re- 
quires that  the  insurer  should  be  ac  well  informed  as  the  assured 
of  all  the  circumstances  constituting  or  increasing  the  risk  which 
is  offered  to  the  insurer  (6),  and  if  he  is  not  so  informed  in  fact, 
from  whatever  cause,  he  is  not  liable  to  give  any  indemnity. 

T^me  policiea. — Most  policies  of  insurance  other  than  marine,  and 
many  marine  policies,  are  time  policies,  taken  out  for  a  fixed  and 
certain  period  of  time.  Under  such  policies  the  assurance  expires 
at  the  latest  moment  of  the  last  day  therein  named  (c),  unless  a 
special  time  is  named  in  the  policy.  And  even  if  the  days  of  grace 
are  passed,  many  insurers  will,  if  no  loss  has  happened  and 
no  increase  of  nsk  has  occurred,  allow  the  policy  *to  be  re-  [*1(X)] 
habilitated  on  payment  of  the  arrears  with  or  without  a  fine 
for  delay. 

Sometimes  attenipts  are  made  to  construe  time  policies  as  voyage 
policies  (d)f  but  the  Courts  have  not  encouraged  them. 

Voyage  policiea  on  land. — Voyage  policies  against  land  risks  are 
sometimes  taken  out,  but  are  not  so  common  as  time  policies.  They 
cover  the  things  insured  between  certain  geographical  limits. 
Practically  they  impose  upon  the  insurer  the  liabilitv  of  the  com- 
mon carrier  between  the  two  ends  of  the  journey.  The  risk  begins 
in  such  policies  when  the  goods  start  or  get  into  the  carrier's  hands 
(e),  and  continues  from  thence  until  arrival  in  4>he  hands  of  the 


(a)  Sibbald  v.  HiU,  2  Dow  (H.  L)  268. 

(b)  Firfc  per  Shee,  J.,  in  Bates  v.  Hetoitt,  L.  R.  2  Q.  B.  595,  810,  30  L.  J.  Q. 
B.  282.  15  W.  R.  1172.  See  art.  2485,  Civil  Code  of  Lc.  Cau.,  which  accords  with 
English  Law. 

(<■)  Isaacs  V.  Royal,  L.  R.  5  Ex.  296,  89  L.  J.  Ex.  189,  22  L.  T.  N.  S.  081,  18 
W.  R.  982. 

(dj  Crowley  v.  Cohen,  8  B.  A  Ad.  478.  1  L.  .T.  N  8.  K.  B.  158.  Joyce  v.  Ken- 
aard,  L.  R.  7  Q.  B.  78,  41  L.  J.  Q.  B.  17,  25  L.  T.  N  S.  932,  20  W.  R.  288. 

(e)  Boehm  v.  Combe,  2  M  &  S.  17:/. 

101 


♦101 


THE  LAWS  OF  INSURANCE. 


consignee  or  other  specified  determination  of  the  transit,  but  it  will 
not  continue  during  a  deviation '(/}.  In  some  cases  the  carrier 
makes  himself  the  insurer.  Thus  railway  companies  will  grant  in- 
surances on  goods  carried  by  them  for  the  safe  carriage  of  which 
they  are  not  liable  under  the  Carriers  Acts.  No  questions  as  to 
days  of  grace  or  the  like  can  arise  on  voyage  policies,  since  ander 
the  contract  the  liability  lasts  for  the  whole  journey.  The  real  ques- 
tion is,  what  constitutes  arrival?  A  common  case  of  voyage  poli- 
cies on  land  risks  is  that  of  railway  insurance  tickets  for  a  particu- 
lar journey.  Undoubtedly  these  would  not  cover  an  intentional 
deviation  from  the  route  for  which  they  were  issued,  but  would 
cover  risk  of  an  accident  caused  by  the  points  going  wrong,  and 
diverting  the  train  from  the  direct  route  to  a  branch  line. 

Before  delivery  oj  policy. — The  commencement  of  the  risk  in  the 
absence  of  special  stipulation  is  not  conditional  on  the  de- 
[*  101]  livery  to  *the  assured  of  the  policy,  provided  that  the  first 
premium  is  paid,  and  that  the  contract  is  in  all  other  re- 
spects complete,  and  in  such  a  case  even  death  before  complete  de- 
livery of  the  policy  is  no  bar  to  recovery  unless  so  stipulated  (9). 
And  where  a  fire  occurred  after  the  deposit  was  paid  to  an  agent, 
but  before  the  policy  was  issued,  the  company  was  held  liable  (h). 

Risk  entire.— -The  risk  taken  is  entire.  If  it  has  once  attached  no 
apportionment  of  premium  can  take  place,  even  if  the  policy  sub- 
sequently becomes  forfeit  (i).  Questions  occasionally  arise  as  to 
whether  the  risk  is  taken  from  year  to  year  or  from  quarter  to  quar- 
ter (k) ;  and  in  a  case  where,  the  annual  premium  ouing  payable 
by  quarterlv  installments,  with  a  proviso  tnat,  if  the  assured  should 
die  before  the  whole  of  the  quarterly  payments  become  payable,  the 
company  should  retain  from  the  sum  assured  sufficient  to  pay  the 
whole  of  the  premiums  for  that  year,  the  party  died  within  the  first 
twelve  months  after  the  third  quarterly  installment  was  due  but 
before  it  was  paid,  it  was  held  that  the  assured  could  not  recover, 
as  the  installment  had  not  been  punctually  paid  (/). 

Poliq/ — covers  several  losses  up  to  amount  insured.— A  policy  for  a 
vear  covers  all  losses  within  the  year  up  to  the  amount  named.  If 
nalf-a-dozen  small  fires  happen,  the  insurer  must  pay  the  damage 
on  each.    And  it  would  s'em  that  if  a  fire  to  the  full  amount  hap- 


(/)  Pearson  v.  Commerciai  Union,  1  App.  Cas.  498,  45  L.  J.  C.  P.  7(51,  35 
L  T.  N.  S.  445,  24  W.  R.  95 1.  But  see  Charleston  Railroad  Co..  v.  Fitchlmrg 
Mutual  Fire,  TA  Mass.  64,  where  carriages  in  use  on  a  railway  .were  held  to  bo 
insured  on  a  branch  not  owned  by  the  assured. 

{g)  Cooper  v.  Paeific  Mutual,  8  Am.  Rep.  706.  Newman  v.  Belsten,  7G  L.  T. 
228,  affd.  in  C.  A.  Feb.  14,  1884.  Canning  v.  Farquhar,  16  Q.  B.  I>.  72,7.  55  L. 
J.  Q.  B.  225,  34  W.  R.  423.  .>  i  ^ 

(A)  Mackie  v.  European  Assurance  Co.,  21  L.  T.  N.  S.  102,  17  W.  U  <)87. 

(f )  T^ne  V.  Fletcher,  2  Cowp  668,  83  &  84  Vict.  c.  85. 

{k)  Want  V.  Blunt,  12  East  183. 

(t)  Phmtix  Life  Assurance  Co.  v.  Sheridan,  8  H.  L.  C.  745, 81  L.  J.  Q.  B.  01. 
8  L.  T.  N.  8.  664,  7  Jur.  N.  S.  174.  vj     .  wi, 

102 


THE  RISK. 


*103 


pened  for  which  the  assured  was  indemnified  from  other  sources, 
his  policy  would  still  be  alive  for  the  rest  of  his  year  and  in  case  of 
another  tire  (m). 

♦This  view  must,iti88ubmilted,becorrect,foritwouldseem  [*  102] 
absurd  to  contend  that  if  a  pair  of  curtains  had  been  burnt  and 
paid  for,  the  whole  liability  of  the  insurer  waa  thereby  extinguished  for 
the  year  (n).  The  only  mode  of  extinguishing  liability  during  thp 
year  is  actually  paying  damage  to  the  full  amount  insured.  On 
the  other  hand,  as  soon  as  the  maxium  sum  insured  is  paid  in  re- 
spect of  a  loss,  the  insurer's  liability  is  exhausted,  although  the  year 
has  not  expired. 

Termination  of  fire  risk. — In  fire  policies  the  insurers  frequently 
reserve  the  right  to  terminate  the  insurance  either  at  the  ^ud  of  a 
year  or  period  for  which  a  premium  is  paid,  or  at  any  time  on  re- 
paying the  unearned  proportion  of  premium.  If  they  elect  to 
terminate  before,  but  do  not  repay  the  premium  till  after  u  fire,  it 
would  seem  their  election  is  still  valid  (o),  as  the  notice  may  operate 
from  its  delivery,  and  need  not  name  a  future  day  for  termination 
(p).  Notice  to  the  assured's  agent  for  procuring  the  insurance  will 
usually  be  insufficient.  Under  ordinary  circumstances  the  notice 
should  be  given  to  the  assured  himself  (y). 

Duration  of  risk. — The  duration  of  a  life  risk  is  purely  a  matter  of 
contract,  and  it  depends  on  the  terms  of  the  policy  under  which 
each  insurance  is  made  whether  the  insurer  can,  or  cannot,  termi- 
nate the  insurance  and  refuse  further  premiums. 

Word  ^^from." — The  dates  between  which  the  policy  is  expressed 
to  endure  may  be  exclusive  or  inclusive,  according  to  the  form  of 
expression  used,  and  the  context  and  subject  matter.  In  old  poli- 
cies the  words  "for  one  year  from  the  date"  are  found,  and 
that  raised  a  doubt  *whether  the  first  day  was  exclusive  [*  103] 
or  inclusive  (r).  At  present  all  well-drawn  policies  name 
the  days  when  insurance  will  begin  and  end,  and  whether  such 
days  are  exclusive  or  inclusive,  and  even  the  hour  of  the  day  at 
which  the  insurer's  liability  ceases.  If  the  hour  were  not  specific  d, 
the  insurance  would  continue  to  the  last  minute  of  the  day,  for 
ambiguous  and  doubtful  phrases  would  be  construed  against  the 
company.    "  Verba  fortius  accipiuntur  contra  proferentem." 

mrrd  ''^unW — The  word  "until"  in  a  policy  of  insurance  in- 


(m)  Smith  v.  Colonial  Mutual,  6  Victoria  L.  R.  200.  See  Crawley  v.  CoheiL 
3  B.  &  AU.  478,  1  L.  J.  N.  S.  K.  B.  158. 

(h)  Soo  Crawley  v.  Colien,  8  B.  &  Adf  478,  1  L.  J.  K.  B.  1G8  (1832),  deciding 
against  a  cuiitcntion  that  the  policy  was  exhausted  when  goods  to  the  amount 
named  therein  had  been  carried  in  the  plaintitTs  canal  barges. 

(«)  Cain  V.  Lancashire^  9.1  U.  C.  (Q.  B.)  217. 

(p)  Ibid.,  453. 

((/)  Grace  v.  American  Insurance  Co.,  109  U.  S.  (!i  Davis)  278.  • 

(r)  Piigh  V  Duke  of  Leeds,  2  Cowp.  714,  Lou'  Holt's  view  in  Howard' h  Case^ 
2  ball*.  <i26,  1  Lord  Raym.  480,  not  followed.  Isaac  v.  Ii>yal  Exchange,  L.  R.  5 
Ex.  290,  39  L.  J.  Ex.  189,  22  L.  T.  N.  S.  G81,  18  W.  R.  982. 

103 


11 


M 


M 


*104 


THE  LAWS  OF  INSURANCE. 


i       i' 


■|' 


cludts  and  extends  the  insurance  over  the  last  daj;  of  the  period 
for  which  it  is  eflfected.  Thus  certain  goods  were  insured  against 
fire  by  a  policy  in  which  the  insurance  was  expressed  to  be  "from 
the  14th  Feb.  1868  until  the  14th  Aug.  1868,  and  for  so  long  after 
as  the  assured  should  pay  the  sum  of  225  dollars  at  the  time  above 
mentioned."  The  goods  were  burnt  in  the  night  of  14th  August 
1868,  the  insurance  not  having  been  renewed,  and  it  was  held  that 
the  insurance  continued  during  the  14th  August,  and  the  loss  was 
therefore  covered  by  it  («). 

Life  polides.  Duraiim,  of  risk. — If  a  man  receives  a  mortal  wound 
or  contracts  a  niortal  disease  within  the  period  for  which  the  insur- 
ance is  expressed  to  continue,  death  must  ensue  within  such  period 
to  enable  the  policy-money  to  be  recovered. 

Death  must  occur  dvr'mg  insurance. — If  it  occurs  ever  so  short  time 
afterwards,  the  liability  of  the  insurer  is  extinct  (O-  Life  policies 
being  in  most  cases  for  whole  life,  the  question  arising  id  usually 
not  whether  the  death  is  within  the  time,  bat  whether  it  is  within 
the  terms  of  the  policy.  But  the  other  case  occasionally 
[*  104]  ariet  8.  Men  have  ^sometimes  been  too  ill  to  think  about 
business  when  the  time  for  paying  their  premiums  come 
(m),  and  if  they  die  of  the  illness  without  the  premium  having  been 
first  paid,  their  representatives  are  at  the  mercy  of  the  insurers. 
The  Court  will  construe  the  policy  according  to  its  express  terms, 
and  will  not  hold  it  sufficient  that  the  conditions  therein  contained 
had  been  complied  with  as  nearly  as  may  be.  Cy  prhs  doctrine  in- 
applicable.— In  Want  v.  Blunt  (x)  the  stipulation  was  that  the  as- 
sured should  pay  the  premiums  on  a  certain  day  with  fifteen  days' 
grace.  He  died  within  the  days  of  grace,  and  nis  executors  paid 
the  premiums  within  them.  But  the  Court  of  Queen's  Bench  in- 
terpreted the  policy  as  meaning  that  the  assured  must  be  alive  to 
pay  the  premium,  and  that  the  policy  had  expired  in  the  ordinary 
course  on  the  day  when  the  new  premium  fell  due  (v). 

Elements  of  the  risk. — All  facts  and  circumstances  diminishing  or 
increasing  the  likelihood  that  the  event  insured  against  will  happen 
sooner  or  later  are  elements  (z)  constituting  the  risk  to  be  under- 
taken by  the  insurer. 

Perils  ab  intra, — In  insurance  against  fire  an  exact  (a)  description 

is)  Imacs  V.  Royal  In/turaiice  Co.,  L.  II.  5  Ex.  2tM5,  30  L.  J.  N.  S.  Ex.  189.  22 
L.T.  N.  8.  081,  18W.  11. 1)82. 

(<)  Lockyer  v.  Ottley,  1  T.  R.  254.  In  uccideut  policicH  it  is  otherwiso  by  ex- 
press stipulHtion. 

(u)  TTaHn'.  ^f«M/,  12  East  183  (1810). 

(x    12  East  187. 


(y)  III  America  a  case  occurred  where  a  man  on  his  way  to  pay  his  premium 
was  i)ariilysed  and  died.  Howell  v.  Knickerbocker,  4  Am.  Rep.  676, 44. N.  Y.  270. 
The  Court,  not  unanimously,  imheld  the  policy. 

(z)  See  Boi/d  v.  Jhihoh,  8  Camp.  133.  Tat/lor  v.  Dunbar,  h.  R.  4  C.  P.  2O0. 
88  L.  J.  C.  r.  178,  17  W.  11  382. 

(a)  Freedlander  v.  London  Assurance,  1  M.  &  Rob.  171.  Dobaon  v.  Sothebv, 
M.  &  M.  90.  '^' 

104 


THE  RISK. 


*106 


of  property  to  be  insured  is  most  material  in  determining  the  risk  (6). 
A  wooden  house  in  a  town  is  for  more  likely  to  be  burned  down 
than  a  brick  or  stone  building.  A  house  in  a  street  which  has  a 
party-wall  running  right  up  to  the  roof  is  not  in  the  same  danger 
from  fires  in  adjacent  buildings  as  one  not  so  divided  off. 
A  *detached  house  is  only  subject  to  risks  of  fire  from  within.  [*  105] 
And  some  articles,  such  as  gunpowder  and  petroleum,  are 
only  insurable  at  very  high  rates  if  insurable  at  all,  while  iron  and 
stone  in  an  ironmaster's  or  stonemason's  yard  will  rarely  need  in- 
surance at  all.  Insurers  will  not  usually  msure  against  the  inher- 
ent vices  of  anything,  such  as  liability  to  spontaneous  explosion  or 
combustion  (c) ;  so  if  a  horse  is  to  be  insured  his  vices  are  elements 
in  the  risk,  as  would  be  the  state  of  a  haystack. 

Elements  of  risk. — When  a  house  is  insured,  not  only  its  character 
and  construction  are  elements  in  the  risk,  but  also  its  locality ;  for 
an  insurance  against  fire  necessarily  has  regard  to  the  locality  of 
the  subject-matter  of  the  policy,  the  risk  being  probably  different 
according  to  the  place  where  the  subject  of  insurance  happens  to 
be  (d).  This  has  been  held  of  a  fire  policy  for  three  months  on  a 
ship  in  wet  dock  with  liberty  to  go  into  dry  dock,  and  the  assured 
failed  to  recover  because  the  vessel  got  outside  the  permitted  limits, 
and  was  there  burnt  («). 

Any  special  fact  as  to  neighbouring  buildings  which  would  in- 
crease the  risk  must  also  be  disclosed ;  e.  g.y  that  a  fire  has  just  hap- 
pened next  door  (/). 

If  the  thing  insured  is  personal  property,  the  removal  of  it 
usually  ends  the  insurance  (e). 

Locality  had  regard  to. — There  are  many  cases  of  land  insurance 
on  movable  things,  such  as  railway  stock,  carriages,  agricultural 
implements,  and  goods  in  transit.  In  such  cases  the  position 
of  the  thing  is  not  so  essential  to  *the  risk  as  in  insurance  [*  106] 
on  houses  and  furniture.  But  even  they  are  insured  within 
certain  limits,  and  if  burnt  or  lost  outside  these  limits,  there  would 
be  small  chance  of  recovery  {g).  Thus  if  a  Cheshire  Salt  Com- 
pany's waggon  insured  between  Nantwich  and  London  had,  by 
mistake  of  the  London  and  North-Western  Railway,  been  carried 


m 


(6)  Newcastle  Five  Co.  v.  M^Morran,  3  Dow.  (H.  L.)  235.  Quia  v.  National 
Insurance  Co  ,  Jones  jc  Curey  310  (Ir).  Stokes  v.  Cox,  1  II.  &  N.  320,  26  L.  J. 
Ex.  113,  28  L.  T.  161,  3  Jur.  N.  S.  45,  5  W.  11.  89.  Sillem  v.  Thornton,  3  E.  & 
B.  808,  a  W.  R.  524,  23  L.  J.  Q  B.  302,  23  L.  T.  187,  18  Jur.  748. 

(r)  Dudgeon  v.  Pembroke,  2  App.  Cas.  296,  40  L.  J.  Q.  B.  409,  80  L.  T.  N.  S. 
882,  25  W.  11.  499 

(</)  Pearson  v.  Commercial  Union,  1  App.  (  s.  at  505,  45  L.  J.  C.  P.  761,  85 
L.  T.  N.  vS.  445,  24  VV.  It.  9">1.  ItoUand\.  North  liritish  and  Mercantile,  14 
Lr.  Can.  Jur.  09.     M^Clnre  v.  Lancashire,  0  !r.  Jur  N  S  03,  72. 

(e)  Gorman  V.  Uand-in-hand,  Ir.  L.  R.  11  C  L  2^*4;  and  as  to  the  American 
views  on  tho  subject  see  English  v.  Franklin  Co ,  54  Am.  Rep.  377,  and  Notaa 
V.  North- Western  Co.,  64  Am.  Rep.  631. 

(/)  Jhife  V.  Turner,  6  Taunt.  838. 

((/)  Pearson  v.  Commercial  Union,  uhi  supra.  Grant  v.  Etna,  8  Jur.  N.  S. 
705,  16  Moore  P.  C.  510,  10  W.  R.  772,  0  L.  T.  N.  S.  735. 

105 


4l 


*107 


THE  LAWS  OF  INSURANCE. 


I        ■('■! 


I    i  r  ! 


Ivf 


I!  .:• 


Ri        ;i 


off  on  to  the  North  Wales  line  by  the  goods  train  which  occasioned 
the  Abergele  accident,  it  would  probably  be  open  to  the  insurers 
of  that  waggon  to  contend  that  buch  deviation  relieved  them,  and 
that  the  London  and  North- Western  Railway,  only,  if  any  one, 
would  be  liable. 

Life  policy  foca/.— And  in  the  case  of  a  life  policy  expressed  to  in- 
sure against  ribk  in  a  certain  latitude,  if  the  assured  go  to  a  more 
insalubrious  latitude  and  there  die,  his  representatives  cannot  re- 
cover on  the  policy  (h). 

Locality.  What  within  risk.— Tohaxico  was  insured  as  in  Nos.  189, 
191,  of  a  street.  It  never  was  in  either,  but  in  187.  The  Court  de- 
clined to  rectify  the  uolicy  on  the  ground  of  mutual  mistake,  and 
would  not  alter  it  on  the  ground  that  the  agents  would  have,  with 
equal  readiness,  taken  the  risk  in  187.  Tlie  ground  of  decision  was 
that  locality  is  important,  and  that  if  it  is  specified  the  risk  cannot 
be  extended. even  to  an  adjoining  building  (i). 

Only  those  goods  are  within  the  risk  M'hicli  are  in  the  place  speci- 
fied.   The  policy  does  not  cover  them  if  removed,  except  by  assent 

of  the  insurers  attested  by  indorsement  on  the  policy  (k). 
[*  107]  ^Insurance  local. — In  Rollnnd  v.  North  British  and  Mercan- 
tile (0  (a  Canadian  case),  Mackay,  J.,  said,  "  The  place  in 
which  things  are  is  always  a  motif  determinant  of  the  contract.  It 
is  of  the  essence  thereof  that  the  things  and  their  ])Osition  should 
be  known  by  both  parties.  When  goods  are  insured  in  a  building, 
all  information  should  be  communicated  to  the  insurer  to  enable 
him  io  appreciate  the  risk;  e.  g.,  of  what  materials  the  building  is, 
its  situation,  distance  from  other  buildings,  whether  connected  with 
others,  and  so  forth.  Full  information  necessary. — There  must  be 
perfect  understanding  as  to  the  thing  insured,  otherwise  there  is  no 
convention." 

And  in  mercantile  fire  policies,  no  risk  id  taken  of  goods  loading 
or  unloading  unless  specially  bargained  for. 

A  fire  risk  does  not  incluae  the  risk  of  household  furniture  dur- 
ing removal,  and  it  is  consequently  necessary  either  to  insure  (if 
desired)  during  removal,  if  it  be  to  a  great  distance,  or  to  make  the 
carrier  take  the  risk  of  fire. 

Goods  covered  ascertainable  at  date  of  fire. — Whether  a  policy  covers 
goods  in  a  place  at  the  time  of  a  fire,  or  only  th»se  which  were 
there  at  the  time  when  the  policy  was  made  and  continue  to  be 


(A)  Sco  Reed  v  Lancaster  Fire  Co.,  90  N.  Y,  302.  Fowler  v.  ScoULih  Kntti- 
table,  28  L.  J.  Cli.  225,  4  Jur.  N.  S.  HGO,  7  AV.  11.  5,  .12  L.  T.  11». 

(i)  Severances  Continental  I n.sHratice  Co  ,  C  Bissull  (U.  8.  Cir.  Ct.)  15(1.  See 
Pearson  v.  Commercial  Union,  1  Apn.  Cns,  428,  supra.  Jlordcn  v.  Cowmercial 
Union,  5  N.  S.  W.  Law  809,  nffil.  in  P.  C.  18H7.  Jtolland  v.  North  JMtish  and 
Mercantile,  14  Lr.  Can.  Jur.  (19.  Sampson  v.  Secunty  Insurance  Co.,  188  Muss. 
49.  ^  ./  , 

(k)  Theoltald  v.  Railway  Passengers'  Co.,  10  Ex.  45,  18  Jur.  580,  P8  L.  J.  Ex. 
249,  23  L.  T.  228,  2  W.  U  528.  M'Clure  v.  Lancashire  Fire,  0  lr.  Jur.  N.  S. 
68.    RoHand  v.  North  British  and  Mercantile,  14  Lr.  Cun.  Jur.  (i!). 

(0  l4Lr.  Can.  Jur.  09. 

106 


THE   BISK. 


109 


there  at  the  time  of  the  fire,  depends  on  the  wording  of  the  jiolicy 
or  whether  the  goods  are  generally  described  or  specifically  indi- 
cated (m). 

Following  this  rule,  tho  Irish  Exchequer  decided  that  new  hay 
put  on  a  rick  which  had  been  specifically  insured,  in  substitution 
for  hay  which  was  thereon  at  tinae  of  insurance,  was  not  within  the 
policy  (n). 

Jf  goods  not  specifiedj  fire  policy  covers  all  to  amount  named. — Where 
no  specific  description  is  given  it  would  seem  that  a  fire 
policy  will  cover  goods  in  the  place  named  ''to  the  amount,  ["  108] 
regardless  of  the  bringing  in  or  taking  out  of  particular  (o) 
articles,  and  taking  account  only  of  the  quantity  on  the  j^remises 
at  time  of  the  fire  and  the  interest  of  tho  assured  therein.  But  an 
ordinary  fire  policy  is  not  like  a  merchant's  floating  policy  in  the 
mode  in  whicn  the  damage  is  calculated  (p).  The  method  indi- 
cated in  Orowley  v.  Cohen  (q)  only  applies  to  policies  where  tho  risk 
is  in  several  vehicles  of  transport.  Nor  will  an  ordinary  household 
fire  policy  include  tho  property  of  visitors  or  servants. 

The  risk  varies  as  the  mode  of  user,  and  insurers  classify  fire 
risks  in  buildings  very  much  according  to  the  use  to  which  they 
are  put. 

User  of  subject  of  insurance. — It  is  sufiicient  to  state  the  use.  The 
assured  need  not  communicate  facts  relating  to  the  general  course 
of  the  particular  trade  for  which  tho  premises  insured,  or  contain- 
ing the  things  insured,  are  used,  as  all  these  things  are  supposed 
to  be  within  the  knowledge  of  tho  insurer  (r). 

Insurance  on  vacant  buildings. — That  a  house  is  empty  also  in- 
creases tho  risk.  But  this  would  be  rather  because  the  house  while 
vacant  would  be  unguarded,  than  because  such  occupany  comes 
under  the  head  of  user. 

In  America  leaving  a  house  vacant  is  not  deemed  a  sufiicient 
ground  for  avoiding  a  policy,  except  where  special  stipulations  are 
made  to  that  effect  (s) ;  ana  even  where  the  policy  contains  stipu- 
lations as  to  occupation,  mere  temporary  absence  is  not  deemed 
fatal  to  tho  claim  of  tho  assured  (t).  Where  a  statement  of 
intention  to  use  the  thing  insured  in  a  particular  manner*did  [*  109] 


(»m)  Hnlhead  v.  Vnuiiff,  G  E.  it  Bl  312,  3  Jur.  N.  S.  970,  25  L.  J.  Q.  B.  2!)0, 
27  L.  T.  100,  4  \V.  U.  530  Havrimn  v.  EllU,  7  K.  &  Bl.  4(55,  3  Jur.  N.  S.  908, 
20  L.  J.  Q.  B.  239,  29  I.  T  7(1,  5  W.  R.  494. 

(h)  Gorman  v.  lland-iu-Uund,  I.  11.  11  C.  L.  224  (1877).  lirUkh  American 
Inmrance  v.  Joseph,  9  l^r.  Can  lien.  448. 

(o)  Butler  V.  Standard  Fire,  4  U.  C  (App.)  391,  Jintinh  Amen'ma  Inmr- 
ance Co.  V.  Joseph,  9  l..r.  Can.  Rep.  448.  Vrozier  v.  Phasnix  Co.,  2  Hun.  (New 
BruiLs )  200. 

(v)  Thompson  v.  Montreal  (1850),  0  U.  C,  (Q.  B.)  819,  per  Robiimoii,  C.  J. 
Peddic  V.  Qnettec.  C«.,St»iurt  (Lr.  Cuii  )  174  (1824). 

iq)  3  B.  k  Ad  478,  I  L.  J.  O.  S.  K.  B.  l.")8. 

(r)  IVr  Shoo,  J  ,  in  Dates  v.  Hewitt,  1..  R.  2  Q.  B.  598,  at  010,  28  L.  .1.  (J  B. 
282  15  W.  It,  1172. 

is)  Catilin  V.  Sprinafield  Ins.  Co.,  1  Smniior  (IT.  S.)  434,  per  Story,  J. 

(<)  Shacklclun  v.  Sun  Fire  CJflcc,  54  Am.  Rep.  870. 

107 


^t^V 


no 


THE  LAWS  OF  INSURANCE. 


not  amount  to  a  warranty  that  it  should  only  be  so  used,  the 
assured  could  recover  although  there  had  not  been  such  user 

Steam-engine,  user  of. — The  presence  of  a  steajn-engine  on  premises 
must  be  stated,  but  when  it  is  known  to  be  there,  it  nee(^  not  be 
confined  to  one  specific  use  unless  so  stipulated;  and  a  mere  in- 
crease of  danger  in  a  new  method  of  using  a  machine  will  not 
vitiate  the  insurance  unless  there  be  a  condition  to  that  effect  (v). 
In  Baxendale  v.  Harding  a  steam-engine  was  specified  in  a  policy, 
but  subsequently  it  was  attached  to  a  horizontal  shaft  which  was 
carried  through  a  floor  and  connected  with  other  machines  erected 
after  the  insurance  was  efiected.  The  insurers  were  unaware  of  the 
erection  of  these  machines,  but  on  the  premises  being  burnt  the  as 
sured  recovered  from  the  company  («?). 

Alterations. — Where  alterations  or  new  erections  are  made  and  as- 
sented to  with  or  without  extra  premium,  damage  by  fire  origina- 
ting in  the  new  buildings  will  be  within  the  policy  (x).  And  under 
an  ordinary  policy  the  insurers  will  be  liable  for  a  house  altered 
during  its  currency  if  such  alterations  do  not  increase  the  risk. 
But  there  may  be  no  liability  for  a  fire  occurring  during  the  pro- 
gress of  the  work,  as  what  is  called  *' builder's  risk"  is  materially 
greater  than  that  of  an  ordinary  dwelling-house. 

Exceptional  use  of  premises  for  purposes  other  than  specified  in  policy, 
even  thoxigh  risk  increased,  does  not  prevent  assured  recovering. — In  the 
absence  of  fraud  a  policy  is  not  avoided  by  the  circumstances  that 
subsequently  to  the  effecting  of  the  policy  a  more  hazardous  trade 
has  without  notice  to  the  company  been  carried  on  upon  the  prem- 
ises. Thus,  where  premises  were  insured  against  fire  by  the 
[*110]  ^description  of  a  granary  and  "a  kiln  for  drying  com  in 
use"communicatmg  therewith,  the  policy  was  to  be  for- 
feited unless  the  buildings  were  accurately  described  and  the 
trades  carried  on  therein  specified ;  and  if  any  alteration  were  made 
in  the  building  or  the  risk  of  fire  mcreased,  the  alteration  or  in- 
creased risk  was  to  be  notified  and  allowed  by  indorsement  on  the 
policy,  otherwise  the  insurance  to  be  void.  The  assured  carried  on 
no  trade  in  the  kiln  except  drying  corn,  but  on  one  occasion,  with- 
out giving  any  notice  to  the  insurers,  he  allowed  the  owner  of  some 
bark  which  had  been  wetted  to  dry  it  gratuitously  in  the  kiln,  and 
this  occasioned  a  fire  by  which  the  premises  were  destroyed.  Dry- 
ing bark  was  a  distinct  trade  from  drying  corn,  and  more  hazard- 
ous, and  insurers  charged  a  higher  premium  for  bark-kilns  than 


t\ 


xJ-^l  ?J?"«V  -^'««/»««''«»cc  Co.,  15  Mooro  P.   C.  Alfl,  H  Jur.  X.  S.   70r.,  10 
W.  K.  772,  0  L.  T.  N.  S.  735. 

p   ir«  ??ir"n^l^  ^-  ^^^-    ^««««''«'«  V.  Ilardinff,  4  H.  &  N.  445,  28  L.  J. 
XiX'  z<iH,  7  W.  It.  494. 

(id)  Baxendale  v.  Harding^  supra. 
(«)  Mackenzie  v.  Van  Sickles,  J7  U.  C.  (Q.  B.)  220. 
108 


THE   RISK. 


*111 


oom-kilns ;  but  it  was  held  that  the  assured  was  not  precluded  from 
recovering  (y).* 

In  the  case  of  Pirn  v.  Reid,  Pim  carried  on  the  business  of  a 
papermaker,  and  effected  an  insurance  on  the  premises  in  which 
the  business  was  carried  on.  Subsequently  a  large  quantity  of  cot- 
ton waste  was  cleaned  and  dved  there.  At  the  time  of  the  fire  some 
of  this  cotton  waste  was  in  the  mill,  and  it  appeared  that  insurance 
oflBces  generally  declined  to  insure  premises  where  it  was  kept  or 
used,  yet  the  company  was  held  liable  (z).  The  ratio  decidendi  in 
these  cases  appears  to  be  that  nothing  short  of  an  express  and  apt 
stipulation  will  be  deemed  sufficient  to  interfere  with  the  assurea's 
ordinary  liberty  to  use  his  property  as  he  wishes. 

Character  of  lyuHding.  Coffee-house  not  inn. — It  was  held  in  a  case 
at  the  beginning  of  the  century  that  a  coffee-house  did  not  come 
undt,r  the  head  of  inns,  which  are  within  the  class  of  doubly 
hazardous  buildings,  and  that  insurance  thereof  at  the  ordinary 
rate  would  not  be  void.  But  the  question  was  raised 
*by  a  landlord  seeking  to  eject  for  breach  of  covenant  to  in-  [*  111] 
sure,  and  not  by  insurers  (a). 

Character  of  assured. — The  character  of  the  person  assured  is  also 
material  to  the  risk  (b).  This  is  the  principal  reason  for  the  con- 
ditions restricting  assignment  usually  inserted  in  fire  policies. 
There  is  this  difference  between  the  assignment  of  land  and  sea 
policies,  that  in  the  former  case  the  subject-matter  is  generally  with- 
m  the  control  of  the  assignee,  while  in  the  latter  both  ship  and 
goods  are  on  the  high  seas  and  cannot  be  prejudicially  affected  by 
the  assignment  to  a  person  who,  though  he  owns  them,  cannot  af- 
fect their  condition  till  they  reach  port  and  the  risk  ends.  Tho 
happening  of  many  previous  fires  on  the  assured's  premises  goes  to 
character  and  must  be  disclosed. 

T^tle  to  the  property. — The  title  to  the  property  of  the  assured  is  to 
some  extent  material  to  the  risk :  fur  an  insurance  without  interest 
or  title  is  an  inducement  to  arson,  offering  prospects  of  profit.  This, 
however,  is  met  by  the  statute  14  Geo.  III.  c.  48,  precluding  the  in- 
sured from  recovering  beyond  his  interest.  In  America,  in  the  ab- 
sence of  the  statute,  the  Courts  have  met  the  difficulty  by  invoking 
the  principles  and  policy  of  the  Common  Law  (c). 

Insurers  usually  demand  to  be  informed  whether  the  interest  in 
the  house  or  property  insured  amounts  to  total  or  partial,  absolute 
or  limited,  ownership.    But  in  this  country,  as  regards  houses,  pre- 

(y)  Shawv.  Rohherds,  G  A.  &  E.  76,  6  L.  J.  N.  S.  K.  B.  106,  1  Nev.  k  Per. 
279 
(«)  6  M.  &  O.  1,  12  L.  J.  C.  P.  299.  ' 

(a)  Dotd.  Pitt  V  Laming,  4  Camp,  at  76,  per  Lord  EUenborough  (1814). 

(6)  Lynch  v.  Dalzell,  4  Bro.  P.  C.  431,  cited  2  Ad.  &  E.  577. 

(c)  Warnock  v.  Davis,  104  U.  S.  (14  Otto)  779. 

*  Court  will  not  presume  th'at  tho  alteration  of  a  flouring  mill  from  a  burr  pro- 
cess to  tliG  roller  process  increases  the  risk.  Plantero  Mutual  Ins.  Co.  v.  Kow- 
land,  60  Md.  280 

109         ^ 


♦  113 


THE  LAWS  OF  INSURANCE. 


r  ^:  i  !• 


,!!  i''^!' 


I'iii 


■'11!  2' 


Mi 


am 


cautions  are  the  less  necessarj^  owing  to  the  power  of  reinstatement 
given  by  s.  83  of  the  old  Party-walls  Act,  1774  (d). 

This  section  reduces  the  risk,  as  the  insurance-money  may,  un- 
der the  provisions  of  this  Act,  be  intercepted,  and  a  maid  fide  insur- 
ance may  thus  become  unavailing. 
[*  112]  *The  valuation  of  thethings  insured  is  also  material  to  the 
risk,as,ifitisexcessive,itaflFordsthea8suredaprospectofgain 
by  the  perils.  But  it  is  less  material  in  fire  than  in  marine  policies,  as 
the  policy  is  open  and  not  valued,  and  valuation  ia  not  very  important 

until  after  a  loss  (d).  x  u   •     i    i  j 

What  the  fire  risk  taken  covers.— What  may  or  may  not  be  included 
in  a  fire  risk  very  much  depends  upon  the  terms  of  the  policy  and 
conditions.  But  the  Courts  have  laid  down  certain  rules  as  to  the 
construction  of  such  policies  as  have  come  before  them,  by  the  light 
of  which  subsequent  policies  have  been  drafted,  and  which  will 
control  all  such  instruments  in  the  absence  of  contradictory  or  vary- 
ing stipulations. 

What  word  '^fire^  includes.— The  word  fire,  in  contracts  of  fire  in- 
surance, is  taken  in  its  ordinary  signification.  It  is  not  confined  to 
any  technical  and  restricted  meaning,  which  might  be  applied  to  it 
on  a  scientific  analysis  of  its  nature  and  properties,  nor  should  it 
receive  that  general  and  extended  signification  which,  by  a  kind  of 
figure  of  speech,  is  sometimes  applied  to  the  term,  but  it  should  be 
construed  in  its  ordinary,  popular  sense.  Unless  there  be  actual 
ignition,  nnd  the  loss  be  the  effect  of  such  ignition,  the  insurers  are 
not  liable;  e.  g.,  where  sugar  was  spoilt  by  greatheat  through  a  reg- 
ister being  closed,  but  there  was  no  actual  ignition,  the  company 
was  held  not  liable  (c).  There  must  bo  actual  ignition,  and  the  loss 
must  be  the  effect  of  such  ignition.  Not  that  the  identical  property 
to  which  the  damage  occurred  should  be  ignited  or  consumed,  but 
there  must  be  a  fire  or  burning,  which  is  the  proximate  cause  of  the 
loss.  It  is  immaterial  how  intense  the  heat  may  be;  unless  it  be 
the  effect  of  ignition,  is  not  within  the  terms  of  the  policy. 
[*  113]  The  heat  of  the  sun  often  contracts  *iimber,  from  which 
losses  occur,  but  they  would  not  be  considered  losses  by 
fire  unless  there  be  ignition,  and  the  destruction  arose  from  actual 
fire  (/). 

The  insurers  agree  to  make  good  unto  the  assured  all  such  loss  or 
damage  to  the  property  as  shall  happen  by  fire.  Thus  far  there  is 
no  limit  to  their  undertaking. 

Origin  of  fire  does  not  matter, — If  the  loss  happen  by  fire,  unless 
there  was  fraud  on  the  pprtof  the  assured,  it  matters  not  how  the 
flame  was  kindled,  whether  it  be  the  result  of  accident  or  design, 

(d)  14  Geo.  III.  c  78,  and  vide  infra,  cap.  on  ReinstntemenJ. 

(d)  hmides  v.  Pender,  L.  R,  9  Q.  B.  631,  43  L,  J.  Q  H  227,  !)0  L.  T.  N.  S.  547, 
22  W.  R.  884.  BHiUm  v.  Royal,  4  F.  &  F.  !»05,  per  Willes,  J.,  15  ]..  T.  N.  S. 
72. 

(e)  AuHtin  v.  Drewe,  0  Taunt  430,  4  Camp.  300,  Holt  N.  P.  120,  MutMh  180, 
conRidercd  in  Scripture  v.  Lowell,  74  Mass.  (10  Cush  )  850. 

(/)  Jiubcock  V.  Montgomery  Co.,  0  Barb.  (N.  Y.)  037. 

110 


■•'8'i 


THE  RISK. 


*114 


t 


whether  the  torch  be  applied  by  the  honest  magistrate  or  the  wicked 
incendiary,  wliether  the  purpose  was  to  save  the  city  as  in  New 
York,  or  the  country  as  at  Moscow,  whether  the  fire  be  applied  to 
gunfiowder  in  the  basement  or  by  a  burning  shingle  on  the  roof 
(Hillier  v.  Alleghany,  3  Penn.  472,  per  Grier,  J.)>  ^^^  J"  Angell  on 
Insurance  it  is  said :  "  Fire  produced  by  the  friction  of  a  wheel  in 
its  axle,  which  consumes  the  wheel,  is  a  loss  of  the  wheel  by  fire. 
The  burning  of  a  barrel  or  other  vessel  containing  quicklime  which 
is  accidentally  submitted  to  the  action  of  water,  is  a  loss  by  fire  as 
to  the  vessel,  but  the  spoiling  of  the  lime  is  not  such  a  loss.  So  the 
spoiling  or  consuming  of  any  two  chemical  fluids  by  process  of 
combustion  is  not  a  loss  by  fire  as  to  either  of  the  substances,  but 
as  to  any  third  body  it  is  such  loss.  Similarly,  heat  or  fire  pro- 
duced by  vegetable  fermentation,  as  when  a  hayrick  takes  fire  by 
its  own  heat,  is  not  a  loss  by  fire  as  to  the  vegetable  collection,  but 
as  to  surrounding  bodies  it  is  "  (Angell  155). 

Explosion. — Insurance  against  fire  does  not  include  damage  l-y 
mere  heat  and  smoke  from  the  ordinary  fireplaces  if  there  has  not 
been  natural  ignition  (g) ;  nor  will  it  include  damage  by  ex- 
plosion, unless  specially  stipulated,  *or  there  has  been  act-  [***  114] 
ually  a  fire  within  the  building.  On  this  ground  the  Courts 
refused  to  grant  damages  for  injury  to  property  by  the  explosion  of 
the  Erith  Powder  Mills  in  1864  (A),  holdingthat  damage  by  atmos- 
pheric concussion  by  explosion  caused  by  fire  was  too  remote. 
Bramwell,  B.,  explained  fire  as  meaning  either  ignition  of  the  article 
itself  or  a  part  of  the  premises  where  it  is. 

Under  this  rule,  damage  by  explosion  within  the  house  is  not 
within  the  risk,  even  when  it  occurs  in  the  course  of  a  fire  in  tho 
house,  nor  is  the  damage  by  such  explosion  part  of  the  damage 
caused  by  the  fire  (i).  But  it  is  usual  to  insure  specifically  against 
explosion  of  gas  in  domestic  use,  and  by  the  word  "gas"  coal-^as 
for  lighting  purposes  is  meant,  though,  scientifically  speaking,  in- 
numerable other  instances  are  of  a  gaseous  nature  (k). 

Explosion  — In  America,  where  an  insured  building  was  blown 
down  and  the  wind  was  alleged  to  have  blown  fire  into  contact  with 
escaping  gasrs,  the  insurer  was  held  not  liable,  as  tho  policy  con- 
tained a  condition  against  explosion  unless  fire  ensued  (/). 

Gunpowder — In  America  gunpowder  is  held  a  fire  risk  (?)»,),  but 


(a)  Avutin  v.  Drew,  0  Taunt.  C  P.  436  (1816),  4  Camp.  360,  Holt  N.  P.  126, 
2  Marsh  C.  P.  130 ;  and  see  Scripture  v.  Lowell,  74  Mass.  86G. 

(h)  Everett  v.  London  Asmranre,  10  C  B  N.  S  120,  11  Jur  N.  S.  54G,  «4  L. 
J.  C.  P.  2nn,  13  W.  R.  802,  0  N.  11.  234.  In  Tamiton  v.  The  Royal,  8  11  &.  M. 
136,  83  L  J.  Ch.  400,  10  L  T  N.  S.  150,  12  W.  R.  549,  it  was  held  that  a  com- 
pany could  as  a  matter  of  business  pay  for  loss  by  explosion  not  covered  by  policy 
if  it  seemed  in  interest  of  company. 

(t)  Stanly  v.  Western,  L  R.  3  Ex.  71,  87  L.  J.  Ex.  73,  17  L.  T.  N.  S.  513,  16 
W.  R.  309. 

(A)  Stanlei/  v.  Western  Insurance  Co.,  ubi  sup. 

[1)  Triinmtlantk  Fire  v   Dorset/,  40  Am.  Rep.  403. 

(m)  Waters  v.  Merchants,  11  Petew  (U.  S.)  218. 

Ill 


*116 


THE  LAWS  OF  IN8UBANCE. 


t 


■\,  I 


in  this  country  risk  of  explosion  by  gunpowder  is  expressly  ex- 
cluded in  ordinary  policies  on  house  or  furniture,  and  most  it  not 
all  policies  of  insurance  contain  a  condition  that  the  policy  is  to  be 
void  if  at  any  time  there  is  more  than  a  certain  amount  therein 
stated  of  gunpowder  kept  on  the  premises,  unless  special  provision 

be  made  therein  for  the  storing  of  a  larger  quantity. 
[*  115]     *Such  a  condition  is  not  unreasonable,  and  breach  there- 
of avoids  the  policy,  and  the  condition  is  not  discharged 
by  specification  in  the  policy  of  the  stock-in-trade  as  including 
hazardous  goods  (n). 

Though  gunpowder  was  described  in  one  condition  indorsed  on 
the  policy  ad  of  the  class  hazardous,  this  condition  could  not  be 
held  to  control  the  express  limitation  in  another  condition  of  the 
amount  of  gunpowder  which  the  insurer  would  allow  under  the 
policy;  and  where  a  form  of  policy  intended  for  houses  and  goods 
was  granted  to  a  vessel  plying  on  the  Canadian  lakes  and  rivers, 
without  striking  out  the  conditions  inapplicable  to  the  vessel,  but 
adding  that  the  provisoes,  &c.,  should  take  effect  so  far  as  applicable, 
the  Privy  Council  held  that  the  gunpowder  condition  applied  and 
had  been  broken  (o). 

Loss.  Proximate  cause.— It  must  be  shown,  if  required,  that  the 
loss  was  proximately  and  immediately  (not  remotely)  caused  by 
one  of  the  perils  insured  against  (p).  Usually  this  is  a  question  of 
inference  from  the  facts  proved  at  the  trial,  or  interpretation  of 
terms  used  in  the  policy  (q). 

Excessive  applicakon  of  heat  in  manufaduring. — Where  the  insur- 
ance is  against  fire,  damage  by  excessive  heat  applied  to  manufactur- 
ing purposes,  but  without  ignition,  is  not  within  the  policy  (r).  Nor 
is  damage  by  hot  water  a  fire  loss  within  a  marine  policy  {s). 

Lightning. — Even  the  danger  of  lightning  is  excluded 
[*  116]  from  the  fire  *ri8k,  unless  it  actually  ignites  the  insured 
property  or  part  thereof.  Electricity  is  not  fire  in  the  popu- 
lar sense,  nor  is  damage  caused  by  it  necessarily  damage  by  ignition. 
Policies  usually  give  the  assured  notice  that  the  insurers  will  not 
take  the  risk  of  damage  by  lightning  unless  it  fires  the  subject-mat- 
ter (0 ;  and  this  not  to  contract  themselves  out  of  a  Common  Law 

(n)  M'Ewan  v.  Guthridge,  13  Moore  P.  C.  304,  8  W.  R.  2C5. 

(o)  Beacon  v.  Gibb,  1  Moore  P.  C.  N.  S.  78,  9  Jur.  N.  8.  185,  77  L.  T.  N.  S. 
674,  11  W.  R.  194. 

(p)  Marnden  v.  dti/  and  County  Aeaurance,  L.  R.  1  C.  P.  232,  86  L.  J.  C.  P. 
60,  14  W.  R.  106  Everett  v.  London  Assurance,  19  C.  B.  N.  S.  126.  84  L.  J.  C 
P.  299,  13  W.  R  862, 11  Jur.  N.  8.  546,  0  N.  R.  234. 

(q)  New  York  Express  Co.  v.  JS'adeTs'  Insurance  Co,  132  Mass.  337.  /M.v«r- 
ance  Co.  v.  Ti'anapoitation  Co,  12  Wallace  (U.  8.)  194. 

Ir)  Atkinson  v.  Newcastle  Co.,  L.  R.  0  Ex.  404,  2  Ex.  D.  441. 

(*)  Siordet  y.  Hall,  4  Blin^  607  See  While  v.  Republic  Co.,  61  Maine  01. 
Imis  V.  Springrfleld  Co.,  76  Mass.  (10  Gray)  189.  City  Insurance  Co.  v.  Corliea, 
21  Wend.  (N.  Y.)  867.  Casey.  Hartford  Co.,  18  Illinois  070.  Witherelly. 
Maine  Insurance  Co.,  -19  Maine  200. 

(0  Everett  v  London  Assttrance,  10  C.  B.  N.  S.  126,  04  L.  J  C.  P.  299,  18 
W.  B.  862,  llJur.  N.  8.  646. 

112 


THE  RISK. 


*117 


liability  (u)  but  simply  to  protect  themselves  against  unfounded 
claims.  In  this,  as  in  many  cases,  the  policies  merely  bring  to  the 
notice  of  the  assured  the  ordinary  rules  of  insurance  law.  The 
practice,  however,  of  insurance  companies  seems  to  be  changing, 
and  many  companies  now  announce  that  they  will  take  lightning 
risks,  which,  however,  are  found  in  practice  to  be  infinitesimal.' 

Negligenee. — A  fire  risk  covers  on  the  negligence  of  the  assured, 
his  servants,  and  strangers  (x).  An  insurance  on  goods  carried  by 
land  will  usually  cover  negligence  of  the  carrier,  his  servants  ana 
agents;  and  risk  of  miscarriage  generally  (y).  No  wilful  act  of  the 
insured  is  covered  (z).  But  -^rson  by  a  wife  will  not  disentitle  the 
husband  from  recovering  if  no  crime  be  shown  to  have  been  com- 
mitted by  him  (a). 

Gross  neglect  has  in  America  been  held  guaei  ex  male-fido,  and  in- 
consistent with  good  faith  (6\ 

*Risk  from  incendiary  shauld  be  diacloaed. — Since  fire  poll-  [*117] 
cies  usually  (c),  but  not  always  (d),  cover  risk  of  incendia- 
rism, the  existence  of  any  circumstances  making  an  applicant  liable 
to  have  his  propertjr  burnt  may  be  material  to  be  known  by  the 
insurer. 

If  a  man  has  from  his  unpopularity,  or  from  any  other  cause, 
good  reason  to  fear  that  fire  will  be  set  to  his  premises,  and  he  in- 
sures without  mentioning  the  fact,  his  policy  will  be  void  for  breach 
of  good  faith;  for  it  is  clear  that  an  attempt  or  threat  to  set  fire  to 
property  on  which  insurance  is  sought  is  a  fact  of  great  importance 
lor  the  insurer's  consideration,  and  presumptively  always  material 
to  the  risk  (e). 

So  also  d  fortiori  attempts  made  to  bum  the  property  must  be 
disclosed  (/)  if  recent  enough  to  be  in  any  way  material. 

(tt)  Babcockv.  Montgomery^  Ac,  Co.,  «  Barb.  (N.  Y.)  G37  (1849),  fully  dis- 
cusses the  question  as  to  lightnmgj  and  decides  that  destruction  by  lightning  is  not 
within  a  fire  risk,  unless  there  be  ignition. 

(x)  Busk  V.  Roijal  Exchange.  2  B.  &  Aid.  73  Gibson  v.  Small,  4  H.  L.  C. 
8r)3.  Shaw  V.  liobberds,  1  N.  &  P.  279,  287,  6  Ad.  &  E.  76,  6  L.  J  N.  S.  K.  B. 
106  Dobson  v.  Sotheby,  1  Mood.  &  Mai.  90.  Attatin  v.  Drew,  6  Taunt.  436,  1 
Holt  N.  P.  126,  4  Camp  860,  2  Marsh  C.  P.  130. 

iy)  Boehm  v.  Combe,  2  M.  &  8.  172.  Columbia  Co.  v.  Lawrence,  10  Peters 
(U.  8.^507.  Phoenix  Insurance  Co.  V.  Erie  and  Western,  &c.,  Co.,  10  Davis 
(Sup.  Ct.  U.  S.)  812. 

(«)  Thurtell  v.  Beaumont,  1  Bling.  339,  8  Moore  C.  P.  612,  2  L  J.  C  P.  4. 

(a)  Midland  Insurance  Co.  v.  Smith,  G  Q.  B.  D.  661,  60  L.  J.  Q.  B.  329,  46  L. 
T.N.  8.  411,  29  W.  R.  850. 

(6)  Fletcher  v.  Commonwealth,  86  Mass.  (8  Pickering)  421.  Cf.  Dalloz  Jurisp. 
gen.,  1668,  p.  29. 

(c)  Midland  Insurance  Co.  v.  Smith,  0  Q.  B.  D.  661,  60  L.  J.  Q.  B.  829,  46  L. 
T.  N.S.4U,29W.  R.860. 

(d)  Gorman  v.  Iland-in-Hand,  1  R.  11  C.  L.  224. 

(e)  Watt  V.  Union  Ins.  Co.,  6  N.  S.  W.  Law  48.  North  American  Fire  v. 
Throop.  23  Mich.  167,  7  Am-  Rep.  638.  Walden  v.  Louisiana,  dtc.,  Co.,  12 
Louis.  O.  S.  184. 

(/)  Beebee  v.  Hartford  County  Insurance  Co  ,  26  Conn.  51. 
Haws  vs.  Philada.  Fire  Asao ,  114  Pa.  St.  431.    Boright  v  Sprinafteld  F.  S 


•H 


2i 


M.  Ins.  Co.,  84  Minn.  352. 

8  PORTER  ON  INSURANCE. 


113 


*118 


THE  LAWS  OF  INSURANCE. 


i!    '' ' 


b      ■■     :!!■ 


Neighbour's  danger  material.— So  also  if  a  neighbour  of  the  as- 
sured is  threatened  with  en  incendiary  fire,  and  the  adjacency  of 
the  tenements  makes  risk  to  him  risk  to  the  applicant  (g).  This 
would  appear  to  follow  from  the  general  rule  that  material  facts 
must  be  disclosed  unasked  (A).        ^     .,  ,    ^,      ^,  , 

^reat  during  jpopular  excitement— But  if  the  threat  be  merely  one 
made  in  time  of^popular  excitement,  which  haa  subsided  some  time 
before  application  for  insurance,  there  will  no  need  to  mention  it(i). 
Questicm  as  to  threats.— ^Vhere  the  insurer  asks  in  the  ap- 
r*  118]  plication  form  *whether  the  applicant  has  any  reason  to 
fear  an  incendiary  fire,  the  question  must  be  truly  answered 
or  the  policy  will  be  void.  If  threats  have  been  made,  he  must 
disclose  them  under  such  a  question,  which  goes  to  facts  rather 
than  his  impressions. 

Reasmahle  fear. — What  a  man  has  reason  to  fear  must  be  deter- 
mined by  considering  what  a  reasonably  prudent  man,  not  an  ex- 
tremely timid  or  suspicious  man,  would  consider  gave  him  some 
reason  for  believing  in  the  existence  of  danger.  He  may  not  be 
bound  to  mention  every  idle  rumour  (k),  but  the  smallest  measure 
of  duty  imposed  upon  him  is  to  disclose  what  would  seem  to  a 
reasonably  prudent  man  to  imply  some  risk.  Care  by  assured  not 
alter  duty  to  disclose. — The  duty  to  answer  such  questions  by  stating 
threats  made  is  not  altered  by  their  having  induced  the  applicant 
to  take  additional  care  (/). 

And  to  the  question,  *'  Is  any  incendiary  danger  apprehended  or 
threatened?"  a  negative  answer  would  in  the  same  circumstances 
be  untrue  (m). 

Evidence  of  fear. — ^Where  a  man  to  such  a  question  answers  "No," 
while  he  is  at  the  very  moment  showing  his  direct  dread  of  an  in- 
cendiary fire  by  watching  against  it  and  seeking  insurance,  such 
acts  are  strong  evidence  that  he  had  reason  to  fear  such  fire  (n). 

Onus  of  proof  on  insurer. — Even  where  incendiary  fires  are  ex- 
cepted from  a  risk,  the  onus  of  proof  that  the  fire  was  deliberately 
caused  lies  on  the  insurers ;  ana  if  the  evidence  leaves  it  doubtful 
whether  the  fire  was  caused  by  accident  of  design,  the  judge  is  right 
in  refusing  to  direct  a  verdict  for  the  insurers  (o). 

ig)  Ch.  Bufe  v.  Turner,  6  Taunt.  838. 

(A)  Lindenauy.  Desborough,  8  B.  &  C.  586.    Carter  v.  Boehm,  3  Burr.  1905. 

(»')  Ketty  V.  Hochelaga  Co ,  24  Lr.  Can.  Jur.  298.      Goodvoin  v.  Lancashire 
Fire  Co  ,  18  Lr.  Can.  Jur.  1.    See  Pirn  v.  Eeid,  6  M.  &  O.  10,  12  L.  J.  C.  P 
299.     Curry  v.  Commonwealth^  27  Mass.  (10  Pickering)  536. 

(k)  New  York  Bowery  Co.  v.  New  Ym-k  Fire,  17  Wend.  (N.  Y.)  369,  381 

(/)  Per  Moss,  C.  J.,  in  Greet  v.  Citizens''  Insurance  Co.,  5  U.  C.  (App.)  696, 
601. 

(m)  Herbert  v.  Mercantile  Fire  Co.,  43  U.  C.  (Q.  B.)  884.  Greet  v.  Citizens' 
Insurance  Co.,  5  U.  C  (App  )  590. 

(n)  Campbell  v.  Victoria  Mutual  Fire  Ins.  Co.,  45  U.  C.  (Q.  B  )  412. 

(o)  Gorman  v.  Handtn-Hand,  I  R.  11  C.  L.  224.  Watt  v.  Union  Ins.  Co., 
»  N.  S.  W.  Law  106.    .  . 

114 


THE   RISK. 


*120 


*  Assignment  ofpdicy.  Arson  by  assignor. — If  a  man  takes  [*  119] 
an  assignment  of  a  policy,  he  does  to  subject  to  all  the 
rights,  &c.,  operative  against  the  assignor  (o) ;  and  if  the  assignor 
bums  the  place  down,  the  assignee  cannot  recov^^r.  This  has  been 
decided  in  Canada  as  to  a  mortgage  by  assignment.  The  consent 
of  the  insurers  to  the  assignment  will  not  help  the  assignee,  as  it 
does  not  create  a  new  contract  {p). 

Of  course  a  mortgagee's  policy,  effected  by  him  at  his  own  cost 
on  his  mortgage  interest  only,  would  not  be  affected  by  arson  of 
the  mortgagor. 

Arson  by  wife  or  relative  of  assured  no  defence  to  insurer — Where  a 
fire  is  caused  on  insured  premises  by  the  wilful  act  of  a  third  per- 
son, to  which  the  insured  is  in  no  way  privy,  however  near  the  re- 
lationship of  the  offender  to  the  insured,  the  insurer  is  liable  (q). 
Even  if  the  premises  insured  are  set  on  fire  by  the  wife  of  the  as- 
sured, the  insurer  has  no  defence.  The  doctrine  of  agency  as  be- 
tween husband  and  wife  does  not  extend  to  crimes  (r). 

Arson  mtist  be  proved  as  upon  an  indictment. — If  the  assured  himself 
fired  the  premises,  or  the  hre  b©  by  his  procurement,  of  course  he 
cannot  recover;  but  if  the  defence  of  arson  be  raised,  such  evi- 
dence must  be  adduced  in  support  thereof  as  would  be  required  to 
convict  the  assured  upon  an  indictment  for  arson,  and  the  jury  must 
be  as  fully  satisfied  that  the  crime  charged  is  made  out  as  would 
warrant  their  finding  him  guilty  on  such  an  indictment.  This 
is  the  rule  in  Great  Britain,  followed  in  Canada  (s).  The 
♦American  Courts  incline  to  hold  that  evidence  not  strong  [*  120] 
enough  to  support  a  conviction  for  arson  would  be  strong 
enough  to  defeat  the  claim  of  the  assured  (0- 

Fire  risky  what  included  in.  Fire  occasianed  by  an  act  done  in  duty 
to  the  Slate. — It  was  said  by  Lord  Ellenborough  in  an  insurance 
case, "  If  the  ship  is  destroyed  by  fire,  it  is  of  no  consequence 
whether  this  is  occasioned  by  a  common  accident  or  by  lightning, 
or  by  an  act  done  in  duty  to  the  State  "  (w) ;  and  it  has  been  held 
that  if  a  ship  is  burnt  without  any  fault  in  the  master,  from  an  ap- 
prehension that  she  has  the  plague  on  board,  and  to  prevent  the 

(o)  Rhodes V  Union  Ins.  Co.,  2  N.  Z.  (Sup.  Ct)  106. 

(p)  Chisholm  v.  Procincial  insurance  Co.,  20  U.  C.  (C.  P.)  11.  For  a  mode 
of  avoiding  tliis  danger  to  mortagees,  see  Howes  v.  Dominion  Fire  Co.,  8  On- 
tario (App  )  044. 

(g)  Midland  Insurance  Co.  v.  Smith,  G  Q.  B.  D.  561,  50  L.  J.  Q.  B.  329,  46 
L.  T.  N  S  411,  29  W.  R.  850,  Schmidt  v.  Neto  York  Union  Mutual,  07  Mass. 
(1  Gray)  f/29. 

(r)  Midland  Insurance  Co.  v.  Smith,  supra.  Gove  v.  Farmers^  Mutual  Fire 
Insurance,  48  N.  H.  41. 

(s)  Thurtell  v.  Beaumont,  8  Moore  C  P.  G12,  1  Bine.  339,  2  L  J.  C  P.  4. 
Britton  v.  Royal,  15  L.  T.  N.  S.  73,  4  F.  &  F.  905.  llcrcnks  v.  Hunter,  15  C. 
S.  C.  (Ist  series)  800.  Lambkin  v.  Ontario  Mutual  Fire,  12  U.  C.  (Q.  B.)  578 
(1855). 

(t)  Scott  V.  Home,  1  Dillon  (C.  Ct.  U.  S)  105,  and  sec  May  889  (2nd  ed)  and 
Sansum  Ins.  Dig.  pp.  148-150. 

(u)  Gordon  v.  Bemmington,  1  Camp.  123.     Pothier,  par  Dupin,  vol.  4,  p.  457 


■.68. 


115 


< '. 


♦121 


THE  LAWS  OF  INSURANCE., 


rj'! 


mi  11 
my 


infection  from  spreading,  the  assured  is  entitled  to  recover  (x),  and 
this  doctrine  applies  equally  to  fire  risks  upon  land. 

Damage  whilst  e^inguishin^  fire.— Where  a  fire  has  actually  oc- 
curred, it  must  be  the  proximate  cause  of  the  loss  or  damage  to 
bring  it  within  the  policy,  but  damage  resulting  from  an  apparently 
necessary  and  bmO.  fide  effort  to  put  out  a  fire,  whether  by  spoiling 
goods  with  water  or  throwing  furniture  out  of  window,  or  blow- 
ing up  a  neighbouring  house  to  arrest  the  course  of  the  fire,  or  any 
loss  oirectly  resulting  from  the  fire,  will  be  treated  as  within  the 
risk  (y). 

Damage  hy  fire  brigade.— Within  the  Metropolitan  distnct  any 
damage  done  by  the  fire  brigade,  in  due  execution  of  its  duties,  is 
to  be  treated  as  damage  by  fire  within  the  meaning  of  any  policy 
against  fire  (2). 

So  that  where  an  officer  of  the  brigade  finds  it  necessary  to  oc- 
cupy or  destroy  a  neighbouring  house  so  as  to  sto^  the 
[*  121]  spread  of  a  fire,  and  furniture  is  damaged  by  the  *brigade 
removing  it  for  such  purposes,  the  insurer  is  liable. 

Damage  by  water  to  others  than  tnmred. — When  one  part  of  a  house 
occupied  by  one  tenant  catches  fire,  damage  done  to  the  property 
of  another  tenant  by  water  in  the  effort  to  put  out  the  fire  is  with- 
in fire  policy  on  the  goods  of  the  second  (a). 

Destruction  of  property  by  municipal  authorities. — Where  municipal 
authorities  blow  up  honses  to  stay  the  progress  of  a  fire,  the  insurers 
will,  it  seems,  be  liable  for  the  damage  caused,  quite  irrespective  of 
provisions  in  local  Acts. 

1.  If  the  authorities  act  illegally,  it  is  not  a  case  of  "usurped 
power"  (6),  but  a  mere  excessive  exercise  of  jurisdiction. 

2.  If  they  act  legally,  the  question  of  usurped  power  cannot  arise, 
and  even  if  by  their  act  they  render  the  corporation  or  authorities 
liable  in  dan>ages,  this  will  be  no  defence  to  the  insurers  to  a  claim  on 
the  policy. 

3.  Where  the  loss  is  due  to  fire,  it  does  not  seem  to  matter 
whether  it  be  the  result  of  accident  or  design  the  act  of  u  magistrate 
or  an  incendiary  (c). 

There  is  no  public  statute  on  the  subject  of  the  destruction  of 
buildings  by  municipal  authorities  applicable  to  oth(  r  places  than 
the  metropolis,  and  reference  n.ust  therefore  be  made  to  local  Im- 
provement Acts  in  such  cases. 

Damage  by  removal  when  vrithin  the  policy. — It  seems  that  bare  ap- 

(x)  Emerigon,  torn.  1,  p.  434. 

(.y)  Stanley  v.  Western,  37  L.  J.  Q.  B.  at  76,  per  Kelly,  C.  B.,  L.  R.  3  Ex.  71, 
17  L.  T.  N.  S.  513,  16  AV.  R.  869.  Babcock  v.  Montgomery,  6  Barb.  (N.  Y.) 
637. 

(z)  28  &  29  Vict.  c.  90,  s.  12. 

(a)  Geiseck  v.  Crescent  Mutual,  19  Louis.  Ann.  297  (1867). 

(6)  Defined  in  Drinkwaier  v.  London  Assurance,  ?  W  ilson  363,  ner  BathuraL 
J.  (1767). 

(c)  1836,  City  Fire  Insurance  Co.  v.  Corlies,  '21  Wend.  (N.  Y.)  3G7. 

IIG 


THE  RISK. 


*123 


prehension  that  a  fire  (d)  will  spread  to  his  house  will  not  justify 
(«)  the  assured  in  moving  his  goods  and  claiming  the 
damage  caused  by  *bo  doing  from  the  insurer.  But  if  the  [*  122] 
danger  is  immediate,  he  would  be  iustiiied  (/),  and  by 
damage  occurring  in  the  process  would  fall  on  the  insurers ;  and  in 
this  case  Kelly,  C.  B„  said :  "Any  loss  resulting  from  an  apparently 
necessary  and  bond  fide  eflPort  to  put  out  a  fire,  whether  it  be  by 
spoiling  the  goods  by  water  or  throwing  the  articles  of  furniture  out 
ofthe  window,  or  even  the  destroying^  of  a  neighboring  house  by 
an  explosion  for  the  purpose  of  checking  the  progress  of  the  flames 
— in  a  word,  every  loss  thatclearly  and  proximately  results,  whether 
directly  or  indirectly,  from  the  fire,  is  within  the  policy." 

Fire,  what  within  risk.  Removal  of  goods  when  not  covered — Insurers 
being  only  answerable  for  direct  and  immediate,  not  for  consequen- 
tial and  remote,  losses  from  the  perils  insured  against,  when  that  is 
fire,  the  instrument  of  destruction  must  be  fire,  and  therefore  in  an 
American  case  (flf),  where  the  goods  insured  and  the  house  which 
contained  them  were  not  touched  by  the  fire,  but  the  goods  were 
damaged  in  the  removal  of  them  under  an  apprehension  that  they 
would  be  reached  by  the  flames  which  had  caught  one  of  the  houses 
ofthe  same  block,  it  was  held  that  the  injury  sustained  by  the  as- 
sured in  the  removal  of  his  goods  was  not  a  loss  which  was  covered  by 
his  policy  against  the  peril  of  fire.  The  assured  insured  not  against 
apprehensions  of  fire,  and  the  injury  sustained  originated  not  from 
necessity  to  save  him  from  impendmg  fire,  but  from  an  anticipa- 
tion of  damage  from  it  (h). 

Assured  must  try  to  save  property. — When  his  house  takes  fire,  the 
assured  must  use  reasonable  eflbrts  to  save  his  goods  (i).    He  is 
not  entitled  to  look  on  and  let  them  burn  because  he  is  in- 
sured.   His  *loss  would  in  such  a  case  be  to  such  an  extent  [*  123] 
the  direct  consequences  of  his  own  act. 

Sometimes  a  fire  policy  contains  a  provision  that  the  insured 
shall  use  all  diligence  to  preserve  the  property  in  case  of  fire;  but, 
irrespective  of  its  presence  or  absence,  it  seems  to  be  certain  that 
the  assured  is  entitled  to  be  reimbursed  rateably,  if  not  wholly,  for 
the  cost  of  an  eflfort  to  save  the  property  {^k)  from  the  risk  insured 
against,  and  the  act  of  removal  in  such  a  case  is  not  an  alteration 
of  the  risk,  but  an  attempt  to  avoid  it  (J). 


t 


Hillier  v.  Alle- 


id)  28  &  29  Vict.  c.  90,  s.  12 

{«)  Holtzman  v.  Franklin  Fire,  4  Cranch  (C.  Ct  U.  S.)  295. 
ghentf  County,  3  Penn.  470. 

if)  Stanley  v.  Western,  L.  R.  8  Ex.  74,  37  L.  J.  Ex.  73,  17  L.  T.  N.  S  613, 
leW.R.  369,  per  Kelly,  CB. 

(ff)  Hillier  v.  Alleghany  Ins.  Co.,  8  Penn.  470. 

Oi)  M' Gibbon  v.  Queen  Ins.  Co.,  10  Lr.  Can.  Jur.  227. 

(i)  Levi/  V.  BaiUie,  7  Bline.  349,  seems  the  only  English  case  on  loss  by  re- 
moval, but  there  fraud  was  afleged. 

(A:)  Thompson  v.  Montreal,  6  U.  C.  (Q.  B.)  319.  Talamon  v.  Home  and  Citi- 
zens, 10  Louis.  Ann.  426,  and  per  Kelly,  C.  B  ,  in  Stanley  v.  Western,  L.  R.  3 
Ex.  74, /mpra. 

(0  White  V.  Republic  Co.,  bl  Maine  91.     Case  v.  Hartford,  13  Illinois  676. 

117 


/f 


•■I 


■%.m 


♦  124 


THE  LAWS  OF  INSURANCE. 


;  i 


n  I    m 


:■'. 


w\ 


Removal.  Damage.  Criterion  of  inmrer^s  liaMity.  Rule  in  America. 
—If  the  danger  is  such  that  a  prudent  uninsured  man  would  not 
let  his  goods  remain  in  the  building  threatened,  and  if  the  assured 
uses  the  same  care  as  would  be  exercised  by  a  prudent  uninsured 
man  in  the  removal  of  the  goods,  he  will  be  entitled  to  recover  from 
the  insurer  all  damage  done  in  removing  them  (m). 

Injuries  to  goods  by  wet  or  in  any  manner  from  the  exposure 
during  the  confusion,  &c.,of  a  fire,  and  during  removal,  before  they 
can  be  got  to  a  place  of  safety,  and  goods  lost  or  stolen  during  the 
confusion  of  a  fire,  are  within  the  policy  (n). 

Thefi  during  fire.— In  Canada  tlio  loss  of  goods  by  theft  during  a 
fire  is  held  witliin  the  risk,  and  the  grounds  for  holding  the  insur- 
ers liable  are  well  stated  as  follows :— If  insurers  arc  to  bo  consid- 
ered clear  the  instant  the  efiects  insured  are  beyond  the  reach  of 
the  flames,  whether  afterwards  unavoidably  lost  to  the  assured  or 
not,  then  the  latter  might  be  disposed  to  s  ly :  "  Whilst  my  effects 
remain  in  my  house  they  are  at  the  risk  of  tho  insurers, 
[*  124]  whereas  if  I  put  them  into  the  street  they  will  *be  at  my 
risk ;  I  therefore  will  prevent  their  removal  until  at  any 
rate  I  can  have  due  precautions  taken  for  their  preservation  out  of 
doors."  Moreover,  when  a  house  is  found  to  be  on  fire,  strangers 
arc  let  in  to  assist  in  extinguishing  the  flames  and  in  saving  the 

goods.  It  is  for  the  interest  of  the  insurers  that  this  should  be 
one,  and  losses  resulting  from  a  proceeding  adopted  mainly  for 
their  benefit  ought  not  to  fall  on  the  assured  (o). 

Their  liability  for  goods  stolen  during  a  fire  does  not  seem  to  have 
been  questioned  by  insurers  in  this  country.  In  Levy/  v.  Baillee  (p). 
where  a  claim  of  £1000  for  goods  stolen  was  made,  it  was  resisted 
only  on  tho  ground  of  fraud.  The  rule  of  marine  insurance  seems 
to  be  followed. 

Marine  n/le  in  case  of  theft.— •M.a.r'me  policies  expressly  except 
against  the  risk  of  loss  by  tnieves :  but  when  a  ship  is  run  ashore 
owing  to  a  fire  and  goods  landed  therefrom  are  subsequently  plun- 
dered or  destroyed  b^  landsmen,  and  never  come  again  to  the 
hands  of  the  owners,  it  is  a  loss  by  the  perils  of  the  sea  (q).  In 
the  same  way  it  would  srem  that  losses  of  this  character  conse- 
quent on  a  fire  follow  from  tho  happening  of  the  peril  insured 
against. 

Insurers  can,  of  course,  and  sometimes  do,  exclude  all  liability 
for  loss  by  theft  during  a  fire  (r). 


(w)  Holtzmnn  v.  Franklin  Fire,  4  Craiich  (C  Ct.  U.  S.)  205. 

in)  1850,  Thompson  v.  Montreal,  0  U.  C  (Q.  B.)  810,  per  Uohinson,  C.  o. 

(o)  M^  Gibbon  v.  Queen,  10  I^r.  Can.  Jur.  227.     Harris  v.  London  and  Lanca- 


shire, 10  Lr.  Con.  Jur.  260 

[p)  7Bing.  849.    M^  Gibbon  \.  Queen  Inmrance 
cares  already  cited. 

(q)  Bondrett  v.  Hentigg,  Holt  N.  P.  149,  per  Gibbs,  C.  J 

(r)  Webb  v.  Protection  Co.^  14  Misaouri  8. 
118 


10  Lr.   Can.  Jur.   '22''  and 


Pothior,  torn.  5, 


THE  risk:. 


*126 


Sue  and  labour  clauac-^The  sue  and  labour  clause  (a)  in  marine 
policies  is  occ^ionally  introduced  into  fire  policies  (0.  It  has 
*nothing  to  do  with  salvage  in  the  ordinary  sense  of  the  [*  126] 
word,  since  salvors  have  a  lien  on  things  saved  and  no  other 
claim  whatever  (tt),  and  the  sue  and  labour  clause  would  justify 
claim  for  money  paid  and  work  and  labour  done  to  save  the  in- 
sured goods,  even  if  nothing  were  saved.  Oost  of  an  effort  to  save, 
on  whom  itfaUa. — The  aim  of  the  clause  is  to  induce  the  assured  to 
do  all  he  can  to  save  the  insured  property  by  promising  to  recoup 
him  for  expense  reasonably  incurred  for  the  preservation  of  the 
thing  insured  from  loss  in  consequence  of  the  efiorts  of  the  insured 
and  his  agents  (x). 

In  what  share  cod  borne. — ^The  condition  in  Thompson  v.  Montreal 
Company  (y)  was  that  in  case  of  removal  to  escape  conflagration  the 
insurer  would  contribute  rateably  with  the  assured  and  other  in- 
surers to  the  logd  and  expenses  "attending  the  act  of  salvage."  Of 
this  clause.  Robinson,  C.  J.,  there  said :  ^'  That  clause  was  surely 
not  intended  to  deprive  the  assured  of  any  portion  of  his  claim  un- 
der the  general  terms  of  his  policy,  but  is  a  condition  wholly  for 
his  advantage,  and  intended  to  afford  him  a  remedy  for  something 
in  addition  to  the  compensation  for  his  goods  destroyed,  injured,  or 
lost  in  consequence  of  the  fire.  The  object  of  it  is  no  doubt  to  en- 
courage the  assured  to  make  every  exertion  to  save  his  goods  by 
holding  him  out  the  advantage  of  being  proportionably  reimbursed 
for  the  expenses  which  he  may  incur.  Thus  if  he  is  insured  for 
£2000  in  one  office,  and  for  £iO0Oin  another  on  goods  worth  £5000, 
and  to  avoid  damage  of  an  imminent  fire  he  removes  all  his  goods, 
as  it  turns  out,  in  safety,  the  two  'usurers  would  between  them  con- 
tribute three-fifths  of  the  cost  of  removal  {z). 

*Tho  law  laid  down  in  this  case  as  to  a  fire  insurance  [*  126] 
Seems  quite  in  accordance  with  the  view  of  Lord  Blackburn 
in  Aitcneson  v.  Lohre  (a)  as  to  the  effect  of  the  sue  and  labour  clause. 
Hence  it  could  never  be  contended  by  an  insurer  that  if  nothing 
was  saved  by  such  removal  he  would  not  be  liable  for  the  cost  of 
an  (effort  to  save  it  in  addition  to  the  amount  of  the  policy,  when  a 
clause  such  as  that  above  mentioned  was  inserted  in  tho  policy  as 
an  inducement  to  salvage. 

When  removal  no  risk. — But  these  rules  do  not  of  course  apply  to 


4 

Hi 


(s)  Kiihton  V.  Empire  Imurance  Co.,  L.  R.  1  C.  P.  535,  35  L.  J.  C.  P.  250, 
15  L.  T.  N.  8.  12. 

(<)  Thompson  v.  Montreal,  0  U.  C.  (Q.  B.)  819. 

(«)  Aitchison  v.  Jjohre,  4  Ann.  Cas.  ut  740,  j)cr  Lord  Slackburn.  Reported 
also  49  L.  J.  Q.  U.  123,  41  L.  T.  N.  S.  823,  28  W.  R.  1.  Seo  Forwood  v.  North 
Wales  Mutual,  6  Q.  B.  D.  67,  in  caao  of  partial  loss,  49  L.  J.  C.  P.  593,  42  L.  T. 
N.S.837. 

(x)  Aitchison  v.  Lohre,  4  Ai))).  Cas  705.  Thompson  v.  Montreal,  0  U.  0 
(Q.  B)8I9. 

(y)  OU.C.(Q.  B.)819. 

(«)  Thompson  v.  Montreal,  0  U.  C  (Q.  B.)  819  (1850). 

(a)  4  App.  Cas.  704. 

110 


'I 


%t 


M27 


THE  LAWS  OF  INSURANCE. 


removal  when  the  assured  is  changing  his  home  or  his  place  of 

business. 

Consent  of  insurer  to  removal  necessary. — In  such  cases  the  consent 
of  the  insurer  is  always  necessary,  since  the  risk  is  presumably 
altered,  and  must  be  testified  in  the  manner  stipulated  for  in  the 
policy  or  prescribed  by  the  charter  or  other  instrument  or  by  the 
statute  constituting  the  insurance  corporation.  It  need  not  be  in 
writing,  unless  so  stipulated  or  prescribed.  The  usual  condition  is 
that  the  insurers'  assent  shall  bo  evidenced  only  by  written  endorse- 
ment on  the  policy.  They  are  not  under  any  obligation  to  assent, 
and,  if  a  fire  happens  before  their  assent  is  endorsed,  there  is  no 
means  of  making  them  pay  for  it  (b). 

Goods  not  protected  in  transitu. — Even  where  consent  has  been  ob- 
tained, the  risk  is  not  transferred  till  the  goods  are  removed,  and 
they  are  not  covered  in  the  process  of  removal,  being  then  neither 
in  the  old  nor  in  the  new  place  (c) ;  for  the  assent  does  not  turn  the 
policy  'pro  tempore  into  a  vovage  policy,  and  the  risk  of  removal  is 
on  the  assured  or  his  carrier  according  to  the  terms  of  the  con- 
tract of  carriage. 

No  protection  until  complete  removal. — Only  one  risk  is 
[*  127]  contemplated,  except  by  special  "stipulation.    So  assent  to 
transfer  will  not  amount  to  a  contract  to  covtr  goods  in 
both  places  until  goods  to  the  full  amount  insured  have  been  re- 
moved (d). 

On  this  it  may  bo  observed — 

M'Clure  v.  Lancashire  discussed. — 1.  That  if  the  removal  is  not 
completed  and  the  risk  is  of  the  same  character  in  both  places,  the 
insurers,  by  their  assent  to  the  transfer,  relievo  themselves  I'rom 
liability  as  to  either  the  part  transferred  or  that  which  is  untrans- 
ferred,  though  it  would  seem  that  the  very  object  of  their  assent 
was  to  continue  their  liability  in  such  an  event. 

2.  That  though  to  hold  otherwise  would  be  to  make  the  insurers 
liable  to  a  risk  in  two  places,  the  risk  would  be  of  the  same  char- 
acter in  each  place,  and  the  policy  would  only  bo  divided  into  two 
smaller  policies  at  the  same  rate  on  like  risks ;  and  if  the  liability 
were  held  to  exist  in  both  places  it  would  work  no  unfairness,  since 
it  would  cover  goods  on  their  arrival  at  the  new  place,  and  until 
goods  to  the  value  within  the  policy  had  there  arrived  would  con- 
tinue on  goods  in  the  old  place  to  an  amount  equal  to  the  balance 
not  at  risk  in  the  new  place. 

3.  That  it  was  enougn  in  WClure's  Gase^  for  the  purpose  of  the 
decision,  to  say  that  goods  to  the  full  value  covered  by  the  policy 
/had  been  transferred. 

Sometimes  policies  are  issued  covering  property  not  only  in 


?) 


Noady.  Promndal,  <tv;.,  Co.,  18  IT.  C.  (Q.  B.)  584. 
Kvngge  V.  Ameruan  Exvhange  Fire,  41  N.  Y.  (2  Hond.)  412. 
Republic,  B7  Maine  01,  2  Am.  Rep.  22. 
(f/)  M'Clure  v.  Lancashire,  0  Ir.  Jur.  N.  S.  68. 

120 


White  V. 


THE  BISK. 


*129 


warehouses,  but  in  transit  through  the  streets,  within  hmits  defined 
or  undefined  (e). 

American  case.  Wearing  apparel. — ^A  policy  on  the  goods  in  a 
dwelling-house,  and  covering  wearing  apparel,  has  been  held  in 
Iowa  to  protect  the  assured  against  loss  by  its  destruction 
or  injury  *whilst  it  is  being  worn(/).  This,  however,  would  [*  128] 
seem  to  be  wrong,  because  the  risK  accepted  under  a  fire 
policy  is  essentially  local,  and  depends  upon  the  structure  and 
conditions  of  the  building  in  which  the  goods  insured  are  con- 
tained (g). 

Horses,  (Sec. — It  has  also  been  held  in  America  that  description  of 
horses,  or  stock  or  vehicles  (h),  as  kept  in  a  certain  place,  does  not 
preclude  from  recovery  if  they  are  injured  elsewhere,  by  a  risk  in- 
sured against. 

Chattels  outside  place  where  insured  not  covered. — It  has  been  held 
in  Ireland  that  when  locomotive  chattels,  such  as  agricultural  im- 
plements, carts,  &c.,  are  insured  in  a  certain  piace  the  owner  can- 
not recover  for  them,  if  they  are  burnt  outside  the  limits  of  the 
place  named  (i).  They  are  insured  only  whilst  in  the  specified 
place,  and  while  out  in  the  fields  or  elsewhere  are  at  owner's  risk. 
But  on  return  to  the  specified  place  the  risk  re-attaches. 

Place  not  mentioned,  goods  protected  anywhere. — But  an  insurance  on 
such,  generally  without  mention  of  place,  would  cover  them  where- 
evei^  burnt. 

Removal  of  property  insured. — The  American  Courts  seem  to  a  cer- 
tain extent  at  variance  with  each  other  on  the  subject  of  removal. 
The  rule  generally  adopted  is  this:  "Temporary  removal  of  prop- 
erty, occasional  or  habitual,  in  pursuance  of  a  use  which  is  a  cer- 
tain necessary  consequence  arising  from  the  character  of  the  prop- 
erty, without  any  change  in  the  ordinary  place  of  keeping,  will  be 
no  defence  to  an  action  on  the  policy  "  (k). 

In  view  of  this,  the  words  "  contained  in  "  have  *been  in-  [*  129] 
terpreted  with  reference  to  the  nature  of  the  property  to 
which  they  are  applied ;  and  it  has  been  held  that  a  carriage  in- 
sured, as  contained  in  a  certain  stable,  but  burnt  while  away  for 
repairs,  was  at  insurer's  risk  (t). 

(e)  FaircMld  v.  Liverpool  and  London,  51  N.  Y.  65.  Merrick  v.  Germania, 
64  Penn.  St.  27 

(/)  Langneville  v.  Wentern  Insurance  Co.,  61  Iowa  53!)  (1879),  83  Am.  Rep. 
146.    Noj/es  V.  North- Western  Ins  Co.,  54  Am.  Rep  6!31. 

(a)  Pearson  v.  Commercial  Union,  1  App.  Cas.  505,  46  L.  J.  C.  P.  761,  86  L. 
T.  N.  S.  445,  24  W.  R.  961,  and  per  Cooley,  C  J.,  in  English  v.  Franklin  Fire 
Co.,  64  Am.  Rep.  877. 

(A)  M^Clure  v.  Gerard  Fire  and  Marine,  48  Iowa  849,  22  Am.  Rep.  249,  and 
cases  there  cited. 

!i)  Gormnn  v.  Hand-in- Hand,  I.  R.  II  C  L  224. 
k)  Lyons  V.  Providence  Washington  Co.,  48  A.  M.  Rep.  84  note. 
/)  See  London  and  Lancashire  Co.  v.  Graves  48  Am.  Itep.  84  notCi  and  other 
roses  there  cited     See  also  Pearson  v.  Commercial  Union,  ubi  supra.    Noyea  v. 
North- W&ttern  Im.  Co,  64  Am.  Uup>  681. 

121 


)  'i 


t  1 1 


^  ; 


B'  I 


*130 


THE  LAWS  OP  INSURANCE. 


Ij 


1.1^ 


h   hi 


Fl  I  ■'? 


i;  i-j  i  ! 


&     ■,    ! 


•'-  ■      I 


To  what  extent  the  risk  is  taken.— The  liability  of  the  insurer  is 
limited  to  the  amount  for  which  the  premium  is  paid,  but  the  ob- 
ligation incurred  is  not  to  pajrthe  whole  sum,  but  only  the  damage 
done  by  the  peril  insured  against,  not  exceeding  the  sum  insured. 
The  insurer,  if  property  is  under-insured,  cannot,  independently 
of  special  agreement,  insist  on  paying  only  a  sum  bearing  the 
same  ratio  to  the  damage  as  the  amount  insured  bears  to  the  full 
value  of  the  property  insured  (m).  This  would  be  penalizing  a  man 
for  under-insurance. 

Proportion  payable  where  under-inmrance. — Where,  however,  by  a 
fire  policy  £500  was  insured  on  twelve  months'  rent  of  buildings, 
such  insurance  to  cover  the  rent  of  the  buildings  from  the  time  of 
fire  until  reinstatement,  and  in  the  proportion  which  tlie  period  of 
untenuntableness  should  bear  to  the  term  of  rent  insured  not  ex- 
ceeding twelve  months'  rent,  and  the  buildings  were  damaged  by 
fire  and  remained  untenantable  for  some  months,  it  was  held  by 
the  Court  of  Session  in  Scotland  (dubitante  Lord  Rutherford  Clarke) 
that  the  insured  could  only  recover  an  amount  bearing  the  same 
proportion  to  £500  as  the  period  of  untenantableness  bore  to  twelve 
months  (n). 

•  Voluntary  self-destruction,  and  deaih  as  the  result  of  crime. — The  in- 
surer may  take  a  risk  of  death  by  any  cause  other  than  by  sentence 
of  law,  self-destruction  in  a  sane  mind,  or  the  consequences  of  some 
criminal  violation  of  law.  If  death  ensue  from  any  of  these 
[  *130]  *cause8,  the  insurer  is  not  liable,  since  it  is  contrary  to  the 
policy  of  the  law,  in  such  case,  to  allow  the  insurance 
money  to  be'  recovered  (o).  Thus,  it  has  been  held  that  where 
death  resulted  from  an  operation  unlawfully  performed  to  procure 
abortion  the  insurers  were  not  liable  (p).  And  the  same  has  been 
held  in  America  where  the  assured  was  accidentally  killed  in  a 
TO^/de  caused  bv  his  assaulting  another  person  (a)?  There  must  be 
some  relation  between  the  violation  of  law  ana  the  death  to  make 
good  the  insurer's  defence,  i.  e.,  the  death  must  be  directly  con- 
nected with  the  criminal  act  (r).  Under  this  principle  will  fall  the 
cases  just  mentioned,  and  aJso  death  by  duelling  (s),  in  a  prize 
fight  (0)  or  any  unlawful  sport  (u). 


(m)  Thompson  v.  Montreal,  <tc.,  Co.,  0  U.  C.  (Q.  B)  319. 

(n)  liuchunan  v.  Liocrpool,  London,  and  Globe,  11  C.  S.  C.  (4th  series)  1032, 
21  Sc.  L.  It.  696. 

(o)  Amicable  v.  Holland,  2  Dow  &  CI.  1,  4  Bligh  N.  S.  15)4,  per  Broughum.  C, 
reversing  Holland  v.  Disney,  !i  liuss.  SRI, 

(/>)  Horn  V.  Anglo- Australian,  J^O  L.  J.  Ch.  511  4  h  T.  N.  S.  143,  1)  W.  R. 
859,  7  Jur.  N.  8.  <J7».  JIatch  v.  Mutual  Benejidal  Life,  21  Am.  Rep.  541. 
Bradleji  v.  Hen^cinl  Life,  0  Am.  Rep.  115.  45  N.  Y.  423. 

(g)  Murraif  v.  New  York  Co  ,  48  Am  Rep.  658. 
r)  liradley  v.  Mutual  Co  ,  46  N.  Y.  422. 

(«)  Per  Tiridal,  C  J.,  Jiorrodaile  v.  hunter,  ft  Scott  N.  R.  418,  12  L.  J.  C  P. 
225,  5  M.  &  S.  689,  7  Jur.  44:^. 

(0  Murran  v.  New  York  Co.,  96  N  Y.  614,  48  Am.  Rep.  001. 

(M)  Travellers  Co.  v.  iSeavera,  19  Wallace  (U.  S.)  501. 

122 


THE  RISK. 


*131 


Where  a  policy  contained  a  proviso  that  in  case  the  assured 
should  die  by  his  own  hands,  or  by  the  hands  of  justice,  the  policy 
should  be  void,  the  assured  threw  himself  into  the  Thames  and 
was  drowned;  and  the  jury  having  found  that  he  did  so  voluntary, 
knowing  that  he  should  destroy  his  life,  but  without  being  able  to 
judge  between  right  and  wrong,  it  was  held  that  the  policy  was 
avoided,  as  the  proviso  included  all  acts  of  voluntary  self-destruc- 
tion (a;). 

Suicide. — In  BorrodaUe  v.  Hunter j  Erskine,  J.,  said  that  to  come 
within  the  proviso  the  act  of  self-destruction  should  be  the  volun- 
tary and  wilful  act  of  a  man  having  at  the  time  sufficient 
powers  of  mind  and  reason  *to  understand  the  physical  [  *131] 
nature  and  consequences  of  such  act,  and  having  at  the 
time  a  purpose  and  intention  to  cause  his  own  death  by  that  act; 
and  that  the  question  whether  at  tne  time  he  was  capable  of  un- 
derstanding and  appreciating  the  moral  nature  and  quality  of  his 
purpose  is  not  relevant  to  the  inquiry  further  than  as  it  might  help 
to  illustrate  the  extent  of  his  capacity  to  understand  the  physical 
character  of  the  act  itself. 

Suicide  while  insane. — Where,  however,  there  is  no  provision  in 
the  policy  that  it  should  be  void  if  the  party  whose  life  is  insured 
should  die  by  his  own  hands,  &c.,  the  policy  will  not  be  avoided  by 
his  destroying  himself  while  in  a  state  of  mental  derangement  (s). 

Life  taken  by  assured. — If  the  life  on  which  the  policy  is  granted 
be  taken  by  the  person  who  would  otherwise  receive  the  insurance- 
money,  insurers  are  discharged,  and  the  money  cannot  be  recov- 
ered from  them  (t). 

Insurance  by  Friendly  Society. — Elaborate  precautions  are  taken  in 
the  Friendly  Societies  Act,  1875,  to  prevent  child-murder  with  a 
view  to  the  profit  to  be  made  out  of  tne  burial  club  payments  (u). 

(x)  BorrodaUe  v.  Hunter,  5  M.  &  G.  639,  7  Jur.  443,  6  Scott  N.  R.  418,  12  L. 
J.  C.  P.  225.  Stormont  v.  Watterloo,  <frc.,  Co.,  1  F.  &.  F.  22.  Schultze  v.  In- 
surance Co.,  48  Am.  Rep.  676. 

(»)  Horn  V.  Anglo- Australian  Insurance  Co.,  4  L.  T.  N.  S.  142,  30  L.  J.  N. 
8.  Ch.  611,  «  W  R.  859,  7  Jur.  N.  8.  673.  Brestead  v.  Farmers,  8  N.  Y.  299. 
Dufaur  v.  I'rofeasional  Life  Assurance  Co.,  25  Beav.  603,  27  L.  J.  Ch.  817.  32 
L.  T.  25,  4  Jur.  N.  S.  841.  Vyse  v.  Wakejield,  6  M.  &  W.  44i.  Moore  v.  Wool- 
sey,  4  Ell.  &  B.  248,  24  L.  J.  Q.  B.  40,  24  L.  T.  In5,  3  W.  R.  60,  1  Jur.  N.  8. 
468.  Pritchard  v.  Merchants'  and  Tradesmen'' s  Life  Insurance  Co.,  27  L.  J.  C. 
P.  109,  3  C.  B.  N.  8  622,  30  L.  T  818,  6  W.  R.  340,  4  Jur.  N.  S.  307.  Wain- 
Wright  V.  Bland,  I  Moo.  &  Rob.  480,  1  M.  &  W.  82,  6  L  J  N  8.  E.\.  147.  Man- 
hattan Life  Co.  V.  Broughton,  109  U.  8.  (3  Davis)  126,  where  the  authorities, 
English  and  American,  are  discusBed. 

(I)  JYince  of  Wales  Insurance  Co.  v.  Palmer,  25  Beav.  605 ;  but  see  Arm- 
strong v.  Mutual  Life,  20  Blatch.  (U.  8.)  498. 

(m)  Thus  u  co'wiction  for  not  properly  tending  children  and  giving  them  im- 
proper and  i:  ..uuicieut  nourishment  would  probably  debar  from  recovery  of  the 
burial  club  provision. 

^  A.,  by  a  show  of  force  and  threats  to  rob  obtained  a  sum  of  money  from  a 
public  building,  and  was  shot  and  killed  while  escaping.     Held,  that  ho  did  not 

die  while  violating  any  law"  within  the  meaning  of  a  clause  in  an  insurance 
policy  on  his  life.    Ur{^n  v  Western  Mut.  JienitVQknt  Assn.,  20  Nob.  620, 

123 


m 


'''"  im 


If 


'B! 


*133 


THE  LAWS  OF  INSURANCE. 


1 1 


The  total  amount  payable  on  the  death  of  a  child  under 

r*  1321  five  from  however  many  insuring  societies  may  *not  exceed 

£6,  and  of  a  child  between  five  and  ten  may  not  exceed 

The  insurance  money  is  payable  (under  penalty)  only— 

(1)  To  the  parent  or  personal  representative  of  the  parent. 

(2)  On  production  of  a  certificate  of  death  written  upon  and 
marked  in  a  particular  way  by  the  registrar  so  as  to  confine  its  use 
to  an  insurance  society  (y).  .^    x   x     ux  • 

The  registrar  may  not  grant  a  certificate  to  obtain  an  amount  in 
excess  of  that  above  limited,  nor  without  a  certificate  as  to  the 
cause  of  death  from  a  coroner  or  registered  medical  man,  and  the 
insuring  societies  are  bound  to  inquire  whether  any  and  what  sums 
of  money  have  been  paid  on  the  same  death  by  other  societies. 

Children  over  ten  are  not  protected  by  the  Act.  And  its  pro- 
visions appear  inadequate  for  the  purposes  for  which  they  were  in- 
tended. It  seems  desirable  that  some  change  should  be  made, 
casting  upon  the  insurers  the  duty  of  paying  the  funeral  expenses 
and  no  more.  If  this  were  done,  the  prospect  of  profit  which  now 
leads  to  the  crime  of  child  murder  would  be  taken  awa^. 

Meaning  of  "  commit  made."— The  words  "commit  suicide  "  have 
been  held  to  include  all  acts  of  voluntary  destruction,  whatever  the 
..tate  of  mind  of  the  assured  (2).*  But  these  cases  turn  on  the  in- 
terpretation of  express  words,  bv  which  the  insurer  seeks  to  limit 
the  risk  which  he  will  take,  and  he  is  the  sole  judge  of  what  risk 
he  will  take  (a).  If  the  word  suicide  be  used,  but  the  act  caus- 
ing death  be  not  voluntary,  and  the  assured  did  not  know 
[*  133]  *what  he  was  doing,  the  act  is  within  the  risk  (6).  If  noth- 
ing is  said  in  the  policy  about  cuicide,  the  insurer  is  liable, 
unless  felo  de  se  is  proved  (c).  Proof  lies  on  the  insurer,  and,  if 
the  death  is  explicaole  in  two  ways,  the  presumption  is  against 
suicide  (d).  American  view. — But  if  it  is  clear  that  a  man  .died  by 
his  own  hands,  the  American  Courts,  though  they  follow  Tindal, 
C.  J.  (g),  in  his  opinion  that  dying  by  his  own  hands  and  suicide 
are  svnonymous  terms,  hold  that  the  policy  will  be  void  unless  the 

v^^  .v  ^  ;  ■*  Vict,  c  60,  s.  28  (1). 
fv)    'H  :  il)  Vict  c.  CO,  8.  28  (2). 

<"z)     /('•*,.  Sehwabe,  8  C  B  437,  2  C.  &  K.  184,  17  L.  J.  C.  P.  2,  7  L.  T.  842. 
I    ;  Mile  V.  Hunter,  5  M.  &  G.  689,  12  L  J.  C  P.  226,  7  Jur.  443,  5 

118,  per  Maule.  J.     Cooper  v,  Maamchusetts,  8  Am.  Kep.  461  uiid 


notes. 
(6)  Stormont  v.  Waterloo  Co 

(c)  Horn  v.  Anglo- Australian,  30  L.  J.  v^...  «.x, 
859,  7  Jur.  N.  8.  673.     Diifaur  v.  l^ofesmmal  Life  Co.,  25  Beav 
Ch.  817,  82  L.  T.  26,  4  Jur.  N.  S.  841. 

(d)  Maltorij  v.  Travellers  Co ^  7  Am.  Rep.  410,  47  N.  Y.  562. 


.,  1  F.  &  F.  22. 

"    "   Ch.  611, 


4  L.  T.  N.  S. 


143.  9  W. 
602,  27  L. 


R. 
J. 


(«)  Bonoiiaile  v.  Hunter,  ubt  sup. 


I'ho  insured  hung  himself  while  insane.  Company  held  liable.  Accident  Ins. 
Co.  V.  Crandal,  120  U.  8.  627.  During  dementia,  induced  by  softening  of  the 
brain,  insured  shot  himself  Company  held  liable.  Keels  v.  Mutual  Jieserve 
Fund  Assn.,  29  Fea.  Hep.  198. 

124 


THE  RISK. 


*134 


deceased  was  so  insane  as  to  be  unconscious  that  the  act  he  was 
doing  would  cause  his  death,  or  unless  he  committed  it  under  the 
influence  of  some  insane  and  irresistible  impulse  (/).  Some  policies 
are  drawn  to  exclude  risk  of  suicide  whatever  the  state  of  the  man^s 
mind,  without  considering  the  question  of  his  responsibility  (g).  In 
others  provision  is  made  for  return  of  premiumsin  case  of  suicide  (h). 

Volunteer  and  assignee  in  bankruptcy  canH  recover  where  suicide. — 
Where  a  contract  of  insurance  is  held  void  on  grounds  of  public 
policy,  as,  for  example,  in  a  case  offelo  de  se,  neither  the  assignee 
under  a  voluntary  assignment,  nor  the  assignee  in  bankruptcy  of 
the  assured,  can  recover  thereon  (i). 

Usual  condition  in  case  of  suicide  whilst  insane. — Policies  usually 
provide  that  in  cases  of  suicide  during  insanity  the  policy  shall  not 
be  paid  in  full  but  treated  as  surrendered,  and  the  surrender  value 
thereof  paid  to  the  personal  representatives  or  other  beneficiaries 
named  therein.  By  this  means  substantial  justice  is 
♦done  (and  all  possible  motive  for  suicide  as  a  means  of  [*  134] 
•provision  for  one's  family  removed  0)),  since  the  insurer 
avoids  having  his  risk  increased  by  the  acceleration  of  death  in 
such  a  manner  b^  treating  such  an  event  &f,  resignation  of  the 
utmost  benefit  derivable  from  the  policy,  and  the  representatives  of 
the  assured  and  his  estate  are  not  deprived  of  the  benefit  of  the 
policy  so  far  as  it  was  earned  by  payment  of  premiums. 

Clause  that  assignment  Jar  value  not  avoided  by  suicide  of  assignor. — 
Policies  generally  contain  another  clause  avoiding  them  "if  the 
life  assured  die  by  his  own  hands,  the  hands  of  justice,  by  duelling, 
or  by  suicide;  but  if  any  third  party  have  acquired  a  bona  fide  in- 
terest therein,  by  assignment  or  by  legal  or  equitable  lien  for  a 
valuable  consideration,  or  as  security  for  money,  the  insurance 
thereby  effected  shall  nevertheless  be  valid  and  of  full  effect." 
The  expression  "any  third  party  "  will  not  be  construed  to  mean  a 
person  who,  by  operation  of  law,  becomes  the  assignee  of  the  estate 
of  the  man  whose  life  is  insured  as  a  mere  personal  or  legal  repre- 
sentative to  collect  and  administer  the  estate.  He  is  not  a  third 
party  in  the  true  sense  of  the  terra.  He  is  a  person  invested  with 
certain  powers  to  distribute  the  estate  according  to  justice  and 
equity ;  even  if  he  be  a  third  party  he  is  not  one  who  has  the  policy 
vested  in  him  for  a  valuable  consideration  (k).    Reason  for  clause. — 


IX 


} 


'ill 
1 


ill 


'U 


sf? 


(/)  Van  Zandt  v.  Mutual  Ben.  Life,  14  Am.  Rep.  245.  Brestead  v.  Farm, 
ers,  8  N.  Y.  209,  discussing  all  English  cases  to  1863,  approved  in  Manhattan  Co, 
V.  Broughton,  109  U.  S.  (2  Davis)  121. 

(fl)  Bigelow  v.  Berkshire,  19  Am.  Rep.  028  n.,  93  U.  S.  (8  Otto)  284. 

(A)  Stormont  v.  Waterloo  Co.,  1  F.  &  F.  22. 

(i)  Amicable  v.  Bolland,  4  Bligh  N  S.  194,  2  Dow  &  CI.  1.  But  see  Moore v, 
Woolsey,  4  E.  &  B.  243,  24  L.  J.  Q  B.  40,  1  Jur.  N.  S.  468,  24  L.  T.  156,  8  W. 
R  06. 

(»')  Lotingav.  Commercial  Union  Ins.  Co.,  vide  the  Times,  5  Dec.  1884. 

(k)  Jackson  v.  Forster,  20  L.  J.  Q  B.  8  per  Cockburn,  C.  J.,  1  E.  &  E.  463, 
88  L  T.  200,  7  W.  R  202.  578.  Moore  v.  Woolsey,  4  E.  &  B.  248,  24  L.  J.  Q. 
B.  40,  1  Jur.  N.  S.  468,  24  L.  T.  166,  8  W.  B.  66. 

125 


*136 


THE  LAWS  OP  INSURANCE. 


P  ' 


|1   !■ 


n  I:  ir' 


il 


In  this  case  Cockbum,  C.  J.,  said:  "  I  think  it  may  be  safely  taken 
for  granted  that  the  reason  why  insurance  companies  on  msuring  a 
life  provide  that  in  the  event  of  the  violent  death  of  the  person  as- 
sured, by  his  own  hands  or  by  the  hands  of  an  executioner,  they 
shall  not  be  obliged  to  pay,  is  that  they  insure  upon  the  calculation 
of  the  average  duration  of  human  life.  Were  it  not  for  this  clause 
a  party  might  insure  for  the  benefit  of  those  who  are  to 
[*  135]  come  after  him,  intending  all  the  *lime  to  put  an  end  to 
his  life  (0'  On  the  other  hand,  if  policies  were  liable  to  be 
defeated  by  such  a  death  under  everv  state  of  things,  one  great  in- 
ducement to  persons  to  insure,  namely,  the  possibility  of  disposing 
of  their  policies,  if  expedient,  would  be  taken  away.  Therefore  a 
sort  of  compromise  has  been  made.  The  company  protect  them- 
selves against  any  such  abridgment  of  life;  but  they  say  if  the 
policy  has  been  parted  with  for  a  valuable  consideration,  the  for- 
feiture shall  not  take  effect "  (m).  Loan  by  company  to  assured. 
Policy  containing  such  clause. — If  the  policy  contain  such  a  clause, 
and  the  assured  borrows  money  of  tne  company  on  mortgage  of 
other  property  and  deposits  the  policy  as  collateral  security,  and 
subsequently  commits  suicide  under  temporary  insanity,  the  com- 
pany and  the  assured  will  stand  in  the  same  position  as  if  the 
policy  were  mortgaged  to  a  third  person,  and  therefore  the  com- 
pany will  come  within  the  exception  in  the  clause,  and  the  policy 
will  be  valid  to  the  extent  of  the  mortgage  debt,  which  will  be  con- 
sidered satisfied  so  far  as  policy-moneys  extend  (n).  It  seems  also 
that  if  the  mortgagor's  representative  had  redeemed  the  mortgage 
from  other  sources  he  would  be  entitled  to  recover  on  the  policy 
for  the  benefit  of  the  mortgagor's  estate ;  for  Wood,  V.  C,  said,  "The 
object  of  the  condition  is  to  increase  the  value  of  the  policy  to  the 
holder,  i.  e.,  in  the  first  place,  to  the  assured ;  and  I  do  not  see  how 
I  can  hold  that  in  the  absence  of  fraud  the  estate  of  the  assured 
is  to  be  deprived  of  the  benefit  intended  to  be  given  him  by  the 
exception,  merely  because  the  mortgage  happens  to  be  fully  se- 
cured" (o). 
[*  136]  ^Policy  under  Married  Womm's  Property  Acts. — Where  a 
policy  has  been  issued  under  the  Married  Women's  Prop- 
erty Acts,  1870  and  1882,  it  would  seem  to  be  avoided  by  suicide  of 
the  assured  in  the  same  way  as  any  other  policy ;  because  if  a  man 
is  thus  allowed  to  provide  for  his  family  in  the  event  of  suicide,  one 

(Z)  Suicide  in  a  sane  mind  would  avoid  the  policy.  Homy.  Anglo-Australian, 
*c.,  30  L.  J.  Ch.  511,  per  Wood,  Y.  C,  reported  also  4  L.  T.  N.  S.  142,  7  Jur. 
N.  8.  678,  0  W.  R.  «69. 

(m)  Per  Cockbum,  C  J  ,  Jackson  v.  Foster,  supra. 

(n)  White  V  British  Empire,  Ac,  Co  ,  L.  R  7  Eq.  894,  88  L.  J.  Ch.  HS,  17 
W.  R.  26,  10  L.  T.  N.  S.  306.  Cook  v.  Black,  1  Hare,  300,  6  Jur.  164,  11  L.  J. 
Ch.268. 

(o)  Solicitors  and  General  Life  die,  Co,  v.  Lamb,  2  Do  G.  J.  &  S.  251,  1  H. 
k  M.  716,  88  L.  J.  N.  S.  Ch.  426.  12  W.  R.  041,  10  L.  T.  N.  S.  702,  10  Jur.  N. 
S.  780,  4  N.  R.  818,  followed  in  City  Bank  v.  Sovereign  Life  Insurance  Co.,  82 
W.  R.667. 

126 


::i..;i 


THE  RISE. 


*136 


restraint  against  self-destruction  is  removed,  and  he  might  effect 
such  an  insurance,  intending  all  the  while  to  terminate  his  exist- 
ence. Suicide  in  this  as  much  as  in  any  other  case  is  a  risk  not 
taken  into  account  or  insured  against  by  the  insurance  office. 

^'Dieby  oion  hands." — An  assured  effected  a  policy  on  his  own 
life,  in  which  was  a  proviso  avoiding  the  sameifthe  assured  should 
"die  by  his  own  hands;"  and  he  assigned  the  policy  to  trustees  of 
a  settlement  and  covenanted  with  them  to  pay  the  premiums,  and 
to  "do  and  perform  all  such  acts,  matters,  and  thirge  as  should  be 
requisite  for  keeping  the  policy  on  foot."  Effect  of  siidde  on  covenant 
to  keep  policy  on  foot. — The  assured  afterwards  drowned  himself 
whilst  insane,  and  in  an  action  against  the  iiisurers  the  Court  held 
the  policy  avoided,  and  also  that  the  trustees  were  not  entitled 
under  the  covenant  to  recover  the  money  from  the  estate  of  the  as- 
sured (p). 


i;s 


(p)  Dormwf  v.  Borrodaile,  11  Jur.  231,  879,  5  C.  B.  380,  10  Beav.  335,  9  L. 
T.  449,  16  L.  J.  Ch.  337. 


'  I  t  ■*  V*  I 


127 


■Pi 


*138 


THE  LAWS  OF  ISSIJBANCB. 


1  ^'^A 

'iirTf 

\  :'i 

lyi 

:  I 

'''^'■■■':' 

iiiLiLik   n 


[*137] 


^CHAPTER  V. 

GENERAL  INQUIRIES  MADE  BY  INSURERS. 


In  life  insurance  the  inquiries  made  by  insurers  go  to — 

1.  The  age  of  the  applicant.*  This  is  important  with  regard  to 
the  average  duration  of  human  life.  But  there  may  be  other  cir- 
cumstances tending  to  show  that  the  life  will  be  of  more  or  less 
than  average  duration. 

2.  His  family  history,  as  giving  a  clue  ah  extra  to  his  probable 
constitution  and  prospect  of  longevity.  Under  this  head  questions 
are  usually  asked  as  to  his  parents,  grand-parents,  and  brothers  and 
sisters,  anSi  what  diseases,  if  dead,  they  died  of. 

3.  The  personal  health,  present  and  past,  of  the  applicant,  in- 
cluding therein  his  constitutional  history. 

4.  His  moral  history,  including  therein  his  habits  of  life  past  and 
present.  Under  this  are  included  questions  as  to  steadiness  and 
sobriety,*  and  whether  a  man  is  married  or  not  (a). 

6.  His  geographical  position.'  Cceteris  paribus^  insurance  rates 
would  be  higher  in  an  earthquake  district  of  Southern  America 
than  in  Great  Britain.  Besides  this,  climate  is  an  element  in  the 
risk  both  generally  and  in  respect  of  the  peculiar  constitution  of 
individuals,  as  certain  climates  are  apt  to  be  fatal  to  men  of  certain 
nationalities,  constitution,  and  habits. 

6.  His  occupation.  Some  trades  and  occupations  are 
[*  138]  more  hazardous  than  others,  e.  ^r.,  a  soldier's  than  *a  farmer's 
a  sailor's  than  a  landsman's.  And  where  there  is  no  ap- 
parent difference  in  risk,  the  statistical  tables  show  a  longer  average 
of  life  in  one  profession  than  in  another,  and  insurance  companies 
for  the  purposes  of  their  business  make  close  investigation  of  the 
Registrar-General's  returns.  Moreover,  in  accident  insurance  lia- 
bility to  injury  varies  very  greatly  with  the  occupation  irrespective 
of  its  healthiness  or  unhealthiness. 

(a)  Vide  Jeffries  y.  Union  Mutual  Co.,  1  McCrary  (U.  S.  Circ  Ct.)  114. 

*  False  representation  as  to  age  rendered  contract  invalid.  Sweet  v.  Citizen's 
Mut.  Relief  Society,  78  Me.  641. 

*  If  company  accepts  premiums  after  notice  of  change  in  habits,  policy  is  not 
rendered  void.  Phcenix  Life  Ins.  Co.  v.  Paddin,  120  U.  S.  Ib3.  Pomeroy  v. 
Rocku  Mountain  Ins.  Co.,  9  Col.  29.'). 

^  '  Accepting  proofs  of  death  and  promising  payment,  company  may  waive 
right  to  claim  forfeiture  because  assured  went  into  torrid  zone  Cotton  States 
Life  Ins.  Co.  v.  Edwards,  74  Ga.  220. 

*  Change  in  occupation  avoided  policy.  Northwestern  Mut.  Life  Ins.  Co.  ▼. 
Amermanf  119  111.  820. 

128 


OENEBAI.  INQUIRIES  HADE  BY  INSURERS. 


*139 


Full  and  fair  disclosure  is  required  by  good  faith  from  the  as- 
sured on  all  these  points  and  on  any  others  inquired  of  by  the  in- 
surer, find  on  all  ii  any  other  matters  within  the  knowledge  of  the 
assured  and  material  to  the  risk  (b). 

Questions  as  to  misrepresentation  and  concealment  by  the  assured 
rarely  arise  on  life  policies,  owing  to  the  usual  procedure  in  effect- 
ing them;  for  the  business  of  insurance  is  now  reduced  to  a  scien- 
tific routine,  and  a  series  of  carefully  drawn  questions  are  put  to 
the  applicant,  and  the  truth  of  his  answers  is  vouched  and  agreed 
by  him  to  constitute  the  basis  of  the  contract,  or  incorporated  by 
reference  or  otherwise  in  the  policy;  in  other  words,  the  facts  so 
stated  are  said  to  be  warranted  (c) 

Such  warranty  preludes  all  dispute  as  to  the  materiality  of  the 
questions  put,  but  does  not  constitute  the  sole  obligation  of  the  ap- 
plicant— smce  non-disclosure  of  material  facts,  not  coming  within 
the  terms  of  the  warranted  declaration,  will  liar  recovery  on  the 
policy  as  effectually  as  breach  of  warranty.  The  object  of  the  pro- 
cedure above  stated  is  to  prevent  issues  being  raised,  as  to  th'^  ma- 
teriality of  this  or  that  fact,  at  a  date  which  in  all  human  probabil- 
ity will  be  long  subsequent  to  the  grant  of  the  policy,  and  when, 
possibly,  every  party  to  the  transaction,  or  competent 
♦witness  thereto,  will  be  as  dead  as  the  person  on  whose  life  [*  139] 
it  was  made. 

Age. — 1.  Age  will  be  admitted  by  insurers  if  satisfactory  proof 
be  furnished  by  birth  or  baptismal  certificate.  If  not  admitted  but 
warranted,  strict  proof  is  necessary  that  the  age  is  exactly  as  war- 
ranted (a). 

Personal  health  present  and  past. — 3.  A  man  is  not  bound  under 
the  question  as  to  other  facts  material  to  the  risk,  or,  in  the  absence 
of  questions,  to  disclose  anything  as  to  his  present  or  past  health, 
which  has  not  had  and  is  not  by  its  nature  calculated  to  have  a 
steady  and  continuous  effect  towards  shortening  his  life  (b).  But 
predisposition  to  a  disease  medically  known  to  have  such  effect 
must  be  disclosed,  as  also  previous  attacks  of  such  disease  (c).  The 
same  rules  apply  as  to  answering  questions  regarding  serious  ill- 
ness or  injury  (a).  In  answering  this  question,  honest  belief  in  the 
truth  of  the  answer  is  all  that  is  required  (e),  unless  the  truth  of  the 


(b)  Vide  cap.  vii.,  on  Misrepresentation. 

(c)  Vide  cap.  vi ,  on  Warranty. 

(a)  Cazenove  v  British  Equitable,  G  C.  B.  N.  S.  437,  29  L.  J.  C.  P.  160,  t  L, 
T.  N.  S.  4«4,  5  Jur.  N  S.  1309,  8  W,  R.  243.  See  also  Westropp  v.  Briice,  Batty 
(Ir.  K.  B  )  155, 206.  Life  Association  of  Scotland  v.  Foster,  11  C  b.  O.  (3rd 
series)  851. 

(b)  Watwn  V.  Mainxcaring,  2  Park  Ins.  650,  4  Taunt  768. 
{c)  Morrison  v.  Muspratt,  4  Blinj?  60. 

(d)  ■  Conncctictit  Co.  v.  Moore,  6  App.  Cas.  044.  See  New  Vork  Insurance  Co. 
V.  Flack,  3  Maryland  341,  and  Ins.  Co.  v.  Wilkinson,  13  Wall.  (U.  S.)  222,  for 
criterion  of  seriousness. 

(e)  Jones  v.  IVovincial,  8  C.  B.  (N.  S  )  65,  £6  L.  J.  C.  P.  272,  8  Jur.  N.  8. 
1004,  5  W.  R.  886.     Thomson  v.  Weems.  9  App.  Caa.  671. 

'9  PORTER  ON  INSURANCE.  129 


*141 


THE  LAWS  OF  INSURANCE. 


;'  ■  I 


I' 


if  •'* 


statement  is  warranted,  in  which  case  the  untrnth,  without  any 
moral  guilt,  avoids  the  insurance.  If  a  man  does  not  know  that 
certain  complaints  which  he  has  had  come  within  the  scope  of  the 
inquiry,  the  msurer  must  suffer  for  his  ambiguity  (/),  and  his  war- 
ranties do  not  extend  to  latent  and  unknown  disease. 

A  disease  requiring  confinement  has  been  held  to  be  '  ae  calling 
for  the  attendance  of  a  physician  (g). 
[*  140]  "A  local  disease"  has  in  one  American  case  been  *held 
to  include  the  tubercle  as  a  matter  of  law  (A).  But  usually 
the  American  Courts  leave  any  question  where  there  is  doubt  as  to 
the  disease  being  local  or  general  to  the  jury.  English  cases  are 
rare,  owing  to  the  arbitration  clauses  contained  in  policies. 

Particular  disecwes.— Particular  diseases  must  in  any  case  be  dis- 
closed if  material.  The  insurers  ask  specific  questions  as  to  certain 
diseases,  such  as  scrofula,'insanity,  epilepsy,  fits,  lung  disease,  heart 
disease,  rheumatism,  gout,  and  even  dyspepsia,  but  they  add  gen- 
eral words  to  bring  to  the  applicant's  notice  the  need  of  disclosing 
complaints  material  to  be  known  for  settling  the  premium  or  tak- 
ing the  risk.  A  general  question  asking  whether  the  applicant  ever 
had  any  other  illness,  local  disease,  or  personal  injury  has  been  de- 
scribed as  embarrassing,  and  one  which  could  hardly  be  expected 
to  be  answered  with  strict  and  liberal  truth ;  for  a  man  of  mature 
age  cannot  reasonably  be  expected  to  recollect  and  disclose  every 
illness,  however  slight,  or  every  personal  injury  consisting  of  a  con- 
tusion, cut,  or  blow,  which  he  might  have  suffered  from  in  the 
course  of  his  life;  and  such  a  question  must  be  read,  to  make  it 
reasonable,  with  some  limitation  and  qualification  j>8  referring  only 
to  indisposition  of  a  somewhat  severe  or  serious  chaiicter  (i). 

Afflicted  vnthfits. — Afilicted  with  fits  means  constitutionally  liable 
to  them,  e.  g.,  epileptic  (j),  but  even  if  the  words  "epileptic  or  other 
fits"  be  used,  fainting  fits  are  not  included  (k). 

American  cases  distinguish  from  this  the  question, ''Have  you 
ever  had  fits?"  (0- 

Afflicted  with  gout. — A  man  may  honestly  say  "No"  to  the  ques- 
tion whether  he  had  gout,  though  to  a  doctor  it  would  be 
[*  141]  *clear,  from  symptoms  not  felt,  or  if  felt  not  understood,  by 
the  life  that  the  gout  was  flying  about  his  system  (m). 

Spitting  ofbhod. — Only  what  is  the  result  of  the  diseases  called 
spitting  of  blood  need  be  specified,  i.  e.,  bringing  blood  from  throat 

(/)  Life  Assurance  of  Scotland  y.  Foster,  11  C.  S.  C.  (3rd  series)  351. 

Iq)  Cazennve  v.  British  Equitable,  supra. 

(h)  A  Califomian  case,  42  Cal.  523  ;  but  see  Ins.  Co.  v.  Wilkinson,  13  "Wall. 
(U.  S.)  222. 

(i)  Connecticut  Mutual,  <tc.,  Co.  v.  Moore,  6  App.  Cas.  648. 

( j')  Chattock  V.  Shaw,  1  M.  &  R.  498. 

(k)  Shilling  v.  Accidental  Death,  1  F.  &  F.  116,  2  H.  &  N.  42, 27  L.  J.  Ex.  16. 
6  W.  R.  567. 

{I)  Etna  Ins.  Co.  v.  France,  94  U.  J.  (4  Otto)  561. 

(m)  Fowkei  v.  Manchester,  8  B.  &  8.917,  32  L.  J.  Q.  B.  153,  8L.  T.  N.  S.809, 
IIW.R.  622.  ' 

180 


1 


GENERAL  INQUIRIES  MADE   BY   INSURERS. 


*142 


or  lungs  (not  from  the  teeth  or  stomach)  (n),  as  a  symptom  of  a 
disease  tending  to  shorten  life. 

Medical  attendance. — As  a  means  of  testing  the  accuracy  of  state- 
ments as  to  health,  reference  is  required  to  the  usual  medical  at- 
tendant (o)  of  the  applicant,  and  for  him  to  say  that  he  had  no 
medical  man,  though  lie  had  recently,  if  only  once,  been  attended 
for  a  severy  illness,  would  preclude  his  recovering  under  the 

policy  (p). 

When  ihe  usual  medical  attendant  is  asked  for,  it  is  not  enough 
in  case  of  a  change,  e.  g.,  on  marriage,  to  name  the  doctor  last  at- 
tending, if  another  has  previously  and  for  long  attended.  It  is 
for  the  jury  to  say  whether  the  last  is  the  usual  medical  attend- 
ant (q). 

If  the  usual  attendant  has  not  been  called  in  for  some  time,  and 
another  has  been  employed,  giving  the  name  of  the  former  is 
enough  (r). 

But  the  question  seems  to  be  for  the  jury  in  most  cases  (s) ;  and 
they  have  found  that  omission  to  state  the  name  of  the 
doctor  who  attended  deceased  for  delirium  ^tremens  is  not  [*  142] 
fraudulent  (0,  though  judges  are  of  a  contrary  opinion  (i*). 

Moral  history  past  ana  present.— 4.  Communications  of  habits  ten<?- 
ing  to  shorten  life  must  be  made  (x).  The  habit  of  using  opium, 
laudanum,  or  drinking  is  within  this  rule.  If  a  man  has  had  deli- 
rium tremens  within  the  year  (y),  or  is  habitually  intemperate  (z),  it 
must  be  disclosed.  In  America  a  distinction  for  these  purposes  is 
taken  between  perodical  bouts  and  steady  drinking  (a),  and  it  has 
been  held  by  Lord  Blackburn  that  the  warranty  as  to  temperance 
must  be  construed  with  reference  to  the  habits  of  people  in  the  class 
and  in  the  locality  where  the  insured  lives  (6).    Lord  Watson, 

(h)  Geach  v.  Ingall,  14  M.  &  W.  95,  15,  L.  J.  Ex.  37,  9  Jur.  G91.  Watson  v. 
Maintcaring,  4  Taunt.  763. 

(o)  Mai/nard  v.  Rhode,  5  Dowl.  &  R.  266,  1  C.  &  P.  360.  Everett  v.  Desbor- 
ovgh,  5  Bing.  503. 

(p)  Palmer  V.  Hawes,  (1841),  Ellis  Ins.  131.  Src  Connecticut  Co.  v.  Moore, 
C  App.  Cas.  644.  British  Equitable  Co.  v.  Musgrave,  per  Kay,  J.,  Times  Law 
Rep.  vol.  3,  p.  630. 

{q)  Iluckman  v.  Fernie,  3  M.  &  W.  506,  517,  7  L.  J.  N.  S.  Ex.  163,  2  Jur.  444. 
Everett  v.  Desborough,  5  Bing.  503.  Connecticut  Co  v  Moore,  6  App.  Cas. 
644. 

(r)  Maynard  v.  Rhode,  1  C.  4;  P.  360,  5  D.  &  R.  266.  Connecticut  Co.  v. 
Moore.  6  App.  Cas  644. 

(s)  Scanlonv.  Sceales,  13  Ir.  Law  Rep.  71  (1849.) 

(t)  Hutton  V.  Waterloo,  1  F.  &  F.  735.    Abbot  v.  Howard,  Hayes  (Ir.)  381. 

(m)  Life  Association  of  Scotland  v.  Forster,  11  C.  S.  C.  (3rd  series)  351. 

(«)  Forbesv.  Edinburgh  Life,  10  C.  S.  C  (1st  series)  451. 

{y)  Hutton  v.  Waterloo,  1  F.  &  F.  735.  Scottish  Equitable  v.  Buist,  4  C.  S. 
C.  (4th  series)  1076,  affirmed  by  H.  L  5  C  S.  C.  64  (H.  L.) 

iz)  Southcomb  v.  Merriman,  Car.  &  M.  286. 

(a)  See  May  396  and  *597,  and  the  charge  to  the  jury  in  Sunck  v.  Home  Life,  2 
Dill.  (  C.  Ct  U  S.)  160.  e  J    J' 

(b)  Per  Lord  Blackburn,-  Thomson  v    Weems,  9  App.  Cas.  684-5.     Weems  v. 


Standard  Co.,  21  Sc.  L.  R.  791. 


5»a 


'4 


II 


131 


*143 


THE  LAWS  OP  INSURANCE. 


Ml  'i\ 


P  ^^;;f 


f!   i  'is;  I  -J 
I.  1   :i^i' 


i;  ! 


however,  would  not  go  farther  than  to  allow  the  assured's  position 
in  life,  and  the  habits  of  the  class  to  which  he  belonged,  to  be  t  iken 

into  account  (c).  . ,   ,    ,       ^,  x       /. 

It  is  not  frequently  provided  that  the  warranty  of  temperate 
habits  should  apply  not  only  to  past  and  present,  but  also  he 
promissory,  and  death  by  or  during  intoxication  is  excepted  from 

the  risk. 

In  one  case  (d)  concealment  of  the  fact  that  the  person  whose  life 
was  insured  had  had  a  child  (she  was  unmarried)  was  held  ma- 
terial, and  a  nonsuit  entered. 

Rmdence. — 6.  A  statement  that  A.  resided  at  B.,  but  omitting 
to  say  that  he  was  in  prison  there,  was  held  fatal,  to  the 
[*  143]  ♦right  to  recover  on  the  policy,  as  confinement  and  want  of 
air  and  exercise  were  deemed  prejudical  to  the  life  (e).  Omis- 
sion to  disclose  a  long  previous  residence  in  the  tropics  would  prob- 
ably be  so  likewise.  But  it  has  been  recently  held^  that  to  insert 
merely  temporary  residence,  and  not  the  domicile,  i^  not  fatal  (/). 

Occupation.— 6.  It  is  not  necessary  to  disclose  anything  as  to  the 
occupation  of  the  proposed  assured,  unless  it  is  material  to  the  risk, 
or  asked  for  by  the  insurer  (g).* 

When  a  man  is  asked  for  his  present  occupation,  he  must  state 
it,  even  if  his  regular  occupation  hae  b^n  different,  and  it  is  likely 
to  be  resumed  (h). 

To  depcribe  himself  as  esquire  is  not  a  satisfactory  answer  to  a 
question  as  to  occupation,  but  does  not  amount  to  a  statement 
tnat  the  declarant  has  no  occupation  («).  The  proposed  assured 
was  in  business  as  an  ironmonger,  and  described  himself  in  the 
proposal  simply  as  ^squire,  yet  it  did  not  vitiate  his  claim  on  the 
company. 

(c)  Same  case,  p.  696. 

(d)  Edwards  v.  Barrow,  Ellia  Ins.  128. 

(e)  Huffuenin  \.  Baiflei/,  6  Taunt  186 

(/)  Gropa      .  Jjondon  and  Manr.henter  Co  ,{ifih.T.  161. 

(a)  Limenu  i  v.  Deshorough,  8  H.  &  C  58ii,  f)Oi. 

(n)  Hatimann  v.  Ket/stnne  State,  21  Penii,  46(5. 

(i)  Perrim  v.  Marine  and  General  Travellers,  2  E.  &  E.  817,  20  L.  J.  Q.  B. 
17,  242,  2  li.  T.  N.  S.  0H8,  6  Jur.  N.  S.  69,  627,  8  W.  R.  41,  563 

''If  douth  resulted  from  excessive  use  of  nlcoholic  stimtilents,  not  taken  in  pood 
faith  for  medical  purposes  or  under  medical  advice,  his  health  was  impaired  by 
intemperance,  within  the  meaning  of  the  words  "so  fur  intemperate  as  to  impair 
health."    Aetna  Life  Ins.  Co.  v.  Davey,  123  U.  8  S   C  739. 

"Change  in  employment  of  insured  avoided  policy.  Northweatem  Mid.  Life 
liu.  Co.  V.  Atnerman,  119  111.  820. 


m 


i!.t 


i 


132 


WARRANTY. 


*145 


♦CHAPTER  VI. 


[*144] 


WARRANTY. 


Difference  between  warranty  in  marine  and  other  policies. — Lord 
Blackburn  said  in  Thomson  v.  Weems  (a) :  "  In  policies  of  marine  in- 
surance I  think  it  is  settled  by  authority  that  any  statement  of  a 
fact  bearing  upon  the  risk  introduced  into  the  written  policy  is,  by 
whatever  words,  and  in  whatever  place,  to  bo  construed  as  a  war- 
ranty, and  primd  facie,  at  least,  the  compliance  with  that  warranty 
is  a  condition  prt  cedent  to  the  attaching  of  the  risk.  I  think  that 
on  the  balance  of  authority  the  general  principles  of  insurance  law 
apply  to  all  insurances,  whether  marine,  life,  or  fire  ....  but 
I  do  not  ^hink  that  this  rule  as  to  the  construction  of  marine  poli- 
cies is  also  applicable  to  the  construction  of  life  policies." 

Warranty  in  all  policies. — It  is  a  first  principle  in  the  law  of  in- 
surance, on  till  occasions,  that  where  a  representation  is  material  it 
must  bo  complied  with ;  if  immaterial,  that  immateriality  may  be 
inquired  into  and  shown;  but  if  there  is  a  warranty,  it  is  part  of  the 
contract  that  the  matter  is  such  as  it  is  represented  to  be,  therefore 
the  materiality  or  immateriality  signifies  nothing.  The  only  que  -i- 
tion  is  as  to  the  mere  fact.  When  it  is  agreed  in  any  contract  of 
insurance  that  a  particular  statement  shall  form  the  basis  of  the 
policy,  the  truth  of  that  statement  is  warranted  (6). 

Warrani^/'s  and  conditions  must  be  true. — Warranties  and  conditions, 
being  a  part  of  the  contract,  must  be  true  if  affirmative,  and 
if  promissory  must  *bo  complied  with,  otherwise  the  con-  [*  145] 
tract  cannot  be  enforced,  notwithstanding  the  good  faith  of 
the  assured.  They  are  either  express  or  implied  (c).  The  war- 
ranty must  be  in  the  policy,  or  incorporated  therein  by  reference 
(d).  Implied  warranties  are,  however,  almost,  if  not  quite,  con- 
fined to  marine  insurance. 

iVo  particular  words  necessary  for  warranty. — No  particular  words 
are  necessary  to  constitute  a  warranty ;  honce  where  a  ship  was  in- 
sured, and  m  the  margin  ..as  written  "  eight  nine-pounders  with 
c'ose  quarters,  six  six-pounders  on  her  upner  decks,  thirty  seaman, 
besides  passengers,"  these  words  were  held  to  amount  to  a  war- 
ranty that  the  ship  was  so  provided  (e). 

(a)  9  App.  Ciis.  (184,  21  Sc.  L.  It.  791. 

(6)  NeirciiKfle  Fire  Inmrawe  Co  v.  M'Morran,  8  Dow  H.  L.  255.     Thomson 
V.  WeeniH,  9  App  Chs.  (171.     nWnn  v.  Standard  Co.,  21  8c.  L  R.  791. 
(e)  (iibmn  v  Small,  4  H.  L.  C  8f)8. 

id)  Routledgc  v.  Jiurrell,  1  IIv.  Bl.  256.     Worstey  v.  Wood,  0  T.  R.  710. 
(e)  Bean  v.  Stupart,  Doug.  11. 

188 


'  « 


:1 


146 


THE  LAWS  OF  INSURANCE. 


1' 
1 


iil.i 


1 1 


!■  i 


The  following  words  were  written  in  the  margin  of  the  policy : 
"In  port,  20th  July,  1776."  The  ship  was  proved  to  have  sailed 
on  the  18th  July,  and  Lord  Mansfield  held  that  this  was  clearly  a 
warranty ;  and  though  the  difference  of  two  days  might  not  make 
any  material  difference  in  the  risk,  yet,  as  the  condition  had  not 
been  complied  with,  the  insurer  was  not  liable  (/). 

Facts  warranted  must  be  true  though  immaterial. — The  truth  and 
not  the  materiality  of  the  answers  is  the  question  to  be  considered 
when  the  answers  of  the  party  proposing  to  effect  the  insurance 
form  part  of  the  contract.  Thus  where  a  party  who  desired  to  in- 
sure his  life  received  a  form  of  proposal  confining  the  following 
questions:  "  Did  any  of  the  party's  near  relatives  die  of  consump- 
tion or  any  other  pulmonary  complaint  ?  Has  the  party's  life 
been  accepted  or  refused  at  any  ofl&ce?  "  and  to  these  questions  the 
answer  "  No  "  was  untruly  returned  (gr),  the  policy  having  ex- 
pressed that  if  any  false  statement  was  made  to  the  company  in  or 
about  the  obtaining  or  effecting  of  the  insurance,  the  policy 
[*  146]  should  be  void,  the  House  *of  Lords  decided  that  the  an- 
swers of  the  intending  insurers  being  part  of  the  contract, 
their  truth  and  not  their  materiality  was  in  question  (h).  ' 

Warranties  and  conditions  precedent  must  be  strictly  performed. — It 
may  be  here  mentioned  that  a  condition  precc  dent  forming  part  of 
the  contract  must,  like  a  warranty,  be  strictly  performed.    By  the 

proposals  it  stipulated  *'  that  persons  assured  should 

procure  a  certificate  from  the  minister,  churchwardens,  and  some 
respectable  householders  of  the  parish  not  concerned  in  tho  loss, 
importing  that  they  were  acquainted  with  the  character  and  cir- 
cumstances of  tho  person  insured,  and  knew  or  believed  that  he  by 
misfortune  and  without  any  kind  of  fraud  or  evil  practice  had  sus- 
tained bv  such  fire  the  loss  and  damage  therein  mentioned."  It 
was  held  that  the  procuring  of  such  a  certificate  was  a  condition 
precedent  to  the  right  of  the  assured  to  recover,  and  that  it  was 
immaterial  that  the  minister,  churchwardens,  &c.,  wrongfully  re- 
fused to  sign  the  certificate  (t). 

Fact  warranted  miist  be  strictly  true, — Where  the  questions  and 
answers  of  a  proposal  form  the  basis  of  the  contract,  their  materi- 
ality cannot  be  disputed  by  the  assured  (k\  and  where  a  thing  is 
warranted  to  be  of  a  particular  nature  or  description,  it  must  be 
exactly  such  as  it  is  represented  to  be,  otherwise  the  policy  is  void 
and  there  is  no  contract.  Therefore  where  a  policy  of  fire  insur- 
ance on  a  mill  contained  the  following  warranty:  "  Warranted  that 
the  above  mill  is  comfortable  to  the  first  class  of  cotton  and  woolen 


li 


(f)  Bean  v.  Stupart,  Doua.  12  note. 

(g)  London  Ammrance  v.  Mansel,  11  Ch.  D.  808,  48  L.  J.  Ch,  8;)1,  27  W.  R. 
444.    And  SCO  Jiimell  v.  Canada  Life  Co..  83  U.  C.  (C.  ?.)  250. 

(h)  Andemon  v.  Fitzgerald,  4  11.  L.  C.  484,  17  Jur.  995.    Soo  also  pur  Lord 
Blackburn,  Thomnon  v.  Weetnit,  0  App.  Cas.  671. 
(»■)  Wordey  v.  Wood,  fi  T.  R.  710. 
(k)  Anderson  v.  Pit»gerald,  4  H.  L.  C  484,  17  Jur.  096. 

134 


WARRANTY. 


148 


rates  delivered  herewith,"  the  mill  proved  not  to  be  of  the  firot  clasa 
and  the  House  of  Lords  decided  that  an  action  on  the  policy  could 
not  be  supported.  In  giving  judgment  Lord  Eldon  said :  "  It  is  a 
first  principle  of  the  law  of  insurance  on  all  occasions  that 
where  a  representation  is  material  it  *mu8t  be  complied  [*  147] 
with ;  if  immaterial,  that  immateriality  may  be  inquired  into 
and  shown ;  but  if  there  is  a  warranty,  it  is  part  of  the  contract  that 
the  matter  is  such  as  it  is  represented  to  be.  Therefore  the  mate- 
riality or  immateriality  signifies  nothing.  The  only  question  is  as 
to  the  mere  fact.  What  is  the  building  de  facto  that  I  have  insured? 
(/).  But  where  a  policy  on  cotton- mills  contained  a  warranty  that 
they  should  be  worked  by  day  onl^,  and  a  steam  engine  ana  hori- 
zontal shafts  were  worked  by  night,  it  was  held  to  be  no  breach  of  the 
warranty  (m).  And  a  warranty  that  a  mill  is  "  worked  by  day"  only 
is  not  broken  by  some  portion  of  the  machinery  being  in  motion 
by  night,  (n). 

Not  every  answer  to  a  question  put  by  the  insurers  is  a  warranty. 
Answers  may  be  mere  statements  of  intention  or  opinion,  and  not 
intended  as  warranty  or  representation  (o). 

Expression  of  intention  or  opinion. — Thus  a  steamer  was  insured 
and  was  described  by  the  assured  as  'now  lying  in  the  T.  dock 
and  intended  to  navigate  the  St.  Lawrence  as  a  freight  boat,  and  to 
be  laid  up  for  the  winter  in  a  place  approved  by  this  company." 
The  vessel  was  destroyed  eleven  months  afterwards  by  fire,  and 
had  remained  in  dock  the  whole  time,  and  it  was  held  (reversing 
the  judgment  of  the  Queen's  Bench  of  Lower  Canada)  that  the 
words  were  not  a  warranty,  but  merely  expressed  an  intention  that 
the  vessel  should  navigate  as  mentioned  (p). 

Insured  need  iK^t  state  in  detail  facts  covered  by  warranty. — The 
insured  is  not  bound  to  state  in  detail  facts  covered  by  a 
warranty  except  in  answer  to  inquiries  *made  by  the  in-  [*  148] 
Burers ;  e.  gf.,  where  a  life  was  insured  with  warranty  that 
the  life  was  a  good  one  and  the  person  whose  life  was  insured  suf- 
fered from  an  old  wound,  which  circumstance  was  not  mentioned 
to  the  insurers,  the  life  having  died  from  an  illness  which  had  no 
connection  with  the  wound,  the  non- disclosure  did  not  disentitle 
the  assured  from  recovering,  because  the  question  to  be  decided 
was — Has  the  warranty  been  proved  true?  in  other  words,  Was  the 
life  a  good  one?  not,  Was  the  life  subject  to  any  particular  infirm- 
ity?   Lord  Mansfield  said :    ''  Where  an  insurance  is  upon  a  repre- 


(l)  Newcastle  Fire  Insurance  Co.  v.  M^Morran,  3  Dow  H.  L.  255 

(m)  Whitehead  v.  Price,  2  C.  M.  &  It.  447.  Mayall  v.  MUford,  0  A.  &  E. 
670. 

[n)  Mayan  v.  Mitford,  0  A  &  E.  070,  1  N.  A  P.  732.  Whitehead  v  Price,  2 
C.  M.  k  H.  447,  1  Gule  Ex.  151. 

(o)  Renham  v.  United  Guarantee  Co.,  21  L.  J.  Ex.  317,  16  Jur.  691,  7  Ex. 
744.  Anderson  v  Padjic  Co.,  L.  R  7  C.  P.  66,  26  L.  T.  N.  S.  180,  20  W.  R. 
280. 

(p)  Grant  V.  Etna  Insurance  Co.,  16  Moore  P.  C.  616,  0  L.  T.  N.  S.  786,  8 
Jur.  N.  8.  706.  10  W.  R.  772. 

•  136 


m 


1  '. 


■Ml 
f'l 


*149 


THE  LAWS  OF  INSURANCE. 


V'  U  I  !  • 


(;  ,';C,«d 


eentation,  everv  material  circumstance  should  be  mentioned,  such 
as  age,  way  of  life,  &c.,  but  where  there  is  a  warranty  nothing  need 
be  told,  but  it  must  in  general  be  proved,  if  litigated,  that  the  life 
was  in  fact  a  good  one,"  and  so  it  may  be  though  he  have  a  par- 
ticulnr  infirmity  (q). 

"  The  insurers  may  stipulate  for  any  warranty  they  please,  and 
if  the  assured  undertakes  that  warranty,  although  it  may  be  some- 
thing not  within  his  or  her  knowledge,  he  or  she  must  abide  the 
consequences.  But  when  the  insurers  intend  that  there  is  a  war- 
ranty of  that  sort,  they  must  make  it  very  plain  that  such  is 
their  intention  (r).  They  must  use  unequivocal  language,  such  as 
persons  of  ordinary  intelligence  may  without  any  difficulty  under- 
stand "  (s). 

"(So/ar  as  knomny — A  warranty  that  facts  stated  are  true,  "so  far 
as  known  to  the  applicant,"  will  be  construed  less  strictly  than  one 
without  these  qualifying  words.    Proof  that  the  applicant  knew 

facts  not  stated  would  be  on  the  defendants  (<)• 
[*  149]  ^Warranty  of  good  health  means  of  reasonably  good  health. — 
Where  there  is  a  warranty  that  the  person  whcse  life  is  in- 
sured is  in  health,  or  in  good  health,  it  is  sufficient  if  he  is  in  a  rea- 
sonably good  state  of  health,  and  even  if  he  laboured  under  a  par- 
ticular infirmity,  if  it  can  be  proved  by  medical  men  that  it  did 
not  at  all  in  their  judgment  contribute  to  his  death,  the  warranty  of 
health  has  been  fully  complied  with,  and  the  insurer  is  liable. 
Therefore  where  a  policy  contained  a  warranty  that  B.  was  in  good 
health  when  the  policy  was  underwritten,  and  it  appeared  in  evi- 
dence that,  though  he  was  troubled  with  spasms  and  cramps  from 
violent  fits  of  gout,  he  was  in  as  good  a  state  of  health  when  that 
policy  was  underwritten  as  he  had  enioyed  for  a  long  time,  Lord 
Mansfield  said :  "  Such  a  warranty  could  never  mean  that  a  man 
has  not  in  him  the  seeds  of  some  disorder.  We  are  all  born  with 
the  seeds  of  mortality  in  us  "  (m). 

Assured  not  muhject  to  gout  or  fits. — So  where  a  policy  contains  a 
warranty  that  the  assured  "  has  not  been  afflicted  with  nor  is  sub- 
ject to  gout,  fits,  &c.,"  such  warranty  is  not  broken  by  the  fact  of 
the  assured  having  had  an  epileptic  fit  in  consequence  of  an  acci- 
dent. Lord  Abinger  said :  "  The  interpretation  I  put  on  a  clause 
of  this  kind  is  not  that  the  party  never  accidentally  had  a  fit,  but 
that  he  was  not  at  the  time  of  the  assurance  being  made  a  person 
habitually  or  constitutionally  afflicted  with  fits,  a  person  liable  to  * 

(<7)  Roxav.  Bradahaw,  1  Wm.  Bl.  812,  2  Park  Ins.  934  (8th  ed.).     Willis  v. 
Fbole,  2  Park  9m  (8th  ed  ). 
(r)  Gibaon  v.  Small,  4  H.  L  C  8f)8. 
(a)  JAf'e  Aaaoeiafiun  of  Scotland  \.  Foater,  11  C.  S.  C.  (Srd  series)  851,  804, 

Ser  Lord  Deas,  371  per  Lord  Ardmillan.  Ducketi  v.  Williama,  a  Cr.  &  M.  848, 
UtingiiiHhed.     Hare  v   Jiaratnw,  8  Jur.  928. 

(t)  Wilkina  v.  Gennania,  57  Iowa  520      Garcelonv.  Hampden  Insurance  Co., 
60  Miiino  680. 

(m)  Willia  V.  Poole,  2  Park  985  (8th  cd.).     lioas  v.  Dradahavo,  1  Wm.   Bl. 
812,  2  Pork  984  (8th  ed.). 

130  *•  . 


:l!  Iill 


WARRANTY. 


*151 


fits  from  some  peculiarity  of  temperament  either  natural  or  con- 
tracted from  gome  cause  or  other  during  life  "  (x). 

Material  statement  untrue,  but  not  to  knowledge  of  assured. — A  pro- 
viso in  a  policy  that  if  the  declaration  under  the  hand  of  the  per- 
son assured  delivered  at  the  insurance  office  as  the  basis  of  the  in- 
burance  is  not  in  every  respect  true,  and  that  if  there  has  been  any 
luir^representation,  &c.,  then  the  insurance  shall  be  void, 
will  *avoid  the  policy,  if  a  statement  of  a  material  fact  con-  [*  150] 
tained  in  the  declaration  is  untrue,  though  not  to  the  knowl- 
edge of  the  assured  (y). 

Effect  of  breach  of  warranty  on  return  of  "premiums. — If  there  is  a 
warranty  of  a  particular  fact  simpliciter,  e.  g.,  against  disease,  then, 
if  it  is  proved  untrue,  the  risk  will  never  have  attached ;  the  pre- 
miums therefore  will  never  have  become  due,  and  may,  if  paid,  be 
recovered  back  as  money  paid  without  consideration.  But  if  it 
is  also  a  term  of  the  contract  that  if  the  statements  are  untrue  the 
premiums  shall  be  forfeited,  then  what  is  untrue  so  as  to  avoid  the 
insurance  is  also  untrue  so  as  to  cause  the  forfeiture  of  the  pre- 
mium (z). 

Evidence  of  warranty. — The  warranty  or  condition  must  be  con- 
tained in  the  policy  or  in  some  paper  referred  to  by  the  policy,  and 
if  a  policy  under  seal  reft^r  to  conditions  contained  in  a  printed 
paper  without  seal  or  signature,  those  conditions  become  part  of 
the  contract  between  the  parties,  and  must  be  complied  with  be- 
fore the  assured  can  recover  («). 

But  though  a  written  paper  be  wrapt  up  in  the  policy  when  it  is 
brought  to  the  insurers  to  subscribe,  and  shown  to  them  at  that 
time,  or  even  though  it  be  wafered  to  the  policy  at  the  time  of  sub- 
scribing, still  it  is  not  in  either  case  a  warranty  or  to  be  considered 
as  a  part  of  the  policy  itself,  but  only  as  a  misrepresentation  (6). 

Declarations  of  insured  as  evidence  of  breach  of  warranty. — 
Declarations  of  the  insured  uttered  some  21  years  *before  [*  151] 
the  insurance,  and  not  shown  to  have  been  parts  of  the  res 
gestos  of  any  acts  or  facts  indicating  a  diseased  condition  of  the  in- 
sured, which  the  declarations  tended  to  explain,  have  in  America 
been  held  not  admissible  to  show  a  bteach  of  warranty  ((;)■ 

Particulars  required. — If  the  insurers  dispute  the  title  to  recover 

(x)  Chattock  v.  Shiiwe,  1  Mo.  &  Rob.  498. 

(y)  M' Donald  v.  Uiw  Union  Fire  and  Life  Assurance,  L.  R.  0  Q  B.  328,  48 
L.  J.  Q.  ».  181,  no  L.  T.  N.  S.  545,  '22  W.  ll  580.  Life  Assurance  of  Svotland 
V.  Foster,  11  C  8.  C  (ikd  series)  851.  Hutchison  v.  National,  7  V.'.  S.  0.  (2ri(I 
series)  407-  M^Laws  v.  U.  K.  Temperance,  23  C.  8.  C."  (2ml  scries)  559. 
Thomson  v.  Weema,  9  Ann.  Cas.  084.  IVeems  v.  Standard  Co ,  22  Sc. 
L.  U.  791. 

(z)  Thomson  v.  Weems,  9  Ann.  Cas.  671.  Weeins  v.  Standard  Co.,  21  Sc. 
L.  H  791. 

(a)  Jioutledge  v.  Burrell,  1  H.  Bl.  255.  Worsley  v.  Wood,  0  T.  U.  710.  Old- 
ham \.  lictouke,  2  H .  Bl.  577  note. 

lb)  Jiean  v  Stupart,  I  Doup  12  note. 

(c)  I'c.iui  y'rania  Mutual  Life  Insurance  Co.  v.  Wiler,  50  Am.  Hep.  709. 

137 


*151 


THE  LAWS  OP  INSURANCE. 


on  the  policy  on  the  ground  that  in  the  proposals  the  assured 
stated  he  had  not  had  certain  diseases,  whereas  he  in  fact  at  the 
time  had  one  of  them,  they  will  be  obliged  to  give  particulars  of 
the  symptoms  of  the  disease  alleged  (d). 

Where  a  company  takes  over  business  of  another  company  and  issues 
new  policy,  warranties,  &c.,  relate  to  date  of  original  policy. — If  one 
company  takes  over  another's  business,  and  issues  a  new  policv  of 
its  own  for  one  surrendered,  the  warranties  therein  relate  back  to 
the  date  of  the  original  and  r>r>t  of  the  substituted  policy  (e).  The 
liability  is  shifted  or  re  inei  ot  lessened  or  altered. 

The  insurers  are  not  p.  »  from  setting  up  breach  of  war- 
ranty in  proposals  by  the  lact  that  they  have  doubted  their  truth 
and  have  sought  and  received  from  their  agent  a  further  and  at  one 
time  satisfactory  report  (/). 

{d)  Marshall  v.  Emperor  Life,  L.  R.  1  Q.  B.  36,  35  L.  J.  Q  B.  89,  13  L.  T. 
N,  S.  281,  12  Jur.  N.  S.  293.  Girdlestone  v.  North  British  and  Mercantile,  11 
Eq.  197,  40  L.  J.  Ch.  2W,  23  L.  T.  N.  S.  392  ;  followed  iu  America,  Vwight  v. 
Germania,  22  Hun.  (N.  Y.)  167. 

(e)  Cahen  v;  Continental  Life,  69  N.  Y.  300. 

{/)  Busaell  v.  Canada  Co,  8  Ontario  (App.)  716. 


i 


188 


MISBEPREBENTATION  AND  CONCEALMKNT. 


*153 


♦CHAPTER  VII. 


[*  152] 


MISREPRESENTATION  AND  CONCEALMENT. 


Uberrima  fides  required  in  contracts  of  insurance. — The  utmost  de- 
gree of  good,  faith  is  required  from  an  assured  in  effecting  a  policy 
of  assurance.  He  must  not  only  state  all  matters  within  his 
knowledge  which  he  believes  to  be  material  to  the  question  of  the 
insurance,  but  all  which  in  point  of  fact  are  so.  If  he  conceals 
anything  that  he  knows  to  be  material,  it  is  a  fraud ;  but  besides 
that,  if  he  conceals  or  fails  to  disclose  anything  that  may  influence 
the  rate  of  premium  which  the  insurers  may  require,  although  he 
does  not  know  that  it  would  have  that  eflfect,  such  concealment  en- 
tirely vitiates  the  policy  (a). 

Materiality  question  for  jury. -rlt  is  a  question  for  the  mry  whether 
any  particular  fact  is  or  is  not  material  when  its  truth  is  not  war- 
ranted or  made  a  condition  precedent  (b). 

All  material  facts  to  be  disclosed. — Policies  of  insurance  are  made 
upon  an  implied  contract  between  the  parties  that  everything  ma- 
terial known  to  the  assured  should  be  disclosed.  That  is  the  basis 
on  which  the  contract  proceeds,  and  it  is  material  to  see  that  it  is 
not  obtained  by  means  of  untrue  representation  or  conceal- 
ment in  any  respect  (c)  that  *means  in  any  material  respect  [*  153] 
(d),  any  respect  which  a  reasonable  man  would  think  ma- 
terial (e).  * 

Mr.  Justice  Bay  ley  said:  "It  does  not  matter  whether  the  in- 
surance is  on  ships,  houses,  or  lives,  the  insurer  should  be  informed 
of  every  material  circumstance  within  the  knowledge  of  the  as- 
sured ;  and  the  proper  question  is  whether  any  particular  circum- 
stance was  in  fact  material,  and  not  whether  the  party  believed  it 
to  beBo"(/). 

(a)  Per  Rolfe,  B.  Dalglish  v.  Jarvie,2  M'N.  &  G.  281,  248.  See  also  Lon- 
don Assurance  v.  Mansel,  L.  R.  11  Ch.  D.  868.  48  L.  J.  Ch.  831,  27  W.  R.  444. 
Maynard  v.  Rhode,  1  Car.  &  P.  860,  5  Dowl.  k  11.  266.  M'Donald  v.  Law 
Union,  dc,  L.  R.  9  Q.  B.  828,  48  L.  J.  N.  S.  Q.  B.  131,  80  L.  T.  N.  8.  545,  22 
W.  R.  530.  Duckett  v.  Williams,  8  L.  J.  N.  S.  Ex.  141,  2  Cr.  &  M.  848.  Moens 
V.  Heyworth,  10  M.  k  W.  147,  per  Parke,  B.  157.  Wainwright  v.  Bland,  5 
L.  J.  N.  8.  Ex.  147, 1  M.  &  W.  82,  1  Mo.  k  R.  481.  Fowkes  v.  London  and 
Manchester,  8  L.  T.  N.  8.  809.  82  L.  J.  Q.  B  163,  8  B.  &  8.  917,  11  W.  R.  622. 

(6)  Lindenau  v.  Desboroughi  8B,  k  C  586.  Morrison  v.  Muspratt,  4  Bing.  60. 

ic)  Moens  v.  Heyworth,  10  M.  &  W.  157. 

la)  London  Assurance  v.  Manselj  11  Ch.  C.  868,  per  Jcssel,  M.  R. 

(e)  Lindenau  v.  Desborough,  ubt  sup  ,  per  Lord  Tenterdeii. 

(/)  Benham  v.  United  Guarantee  Co.,  7  Ex.  744,  vl  L.  J.  Ex.  317,  16  Jur. 
691  Lindenau  v.  Desborough,  ubi  sup ,  per  Bayley,  J.  Newcastle  Fire  Co,  v. 
M'Morran,  8  Dow,  H.  L.  266. 

139 


*154 


THE  LAWS  OF  INSURANCE. 


i    I 


II 


!'j"t: 


P   :^'1>J 


Mr.  Justice  Littledale  said :  "  It  is  the  duty  of  the  assured  in  all 
cases  to  disclose  all  material  facts  within  their  knowledge.  The 
non-answering  of  a  specific  question  would  amount  to  concealment 
if  the  man  knew  the  fact  and  was  able  to  answer  it "  (g). 

Insurance  without  any  representation  by  assured. — When  a  man  ef- 
fects an  insurance  upon  a  life  generally  without  any  representation 
of  the  state  of  the  life  insured,  the  insurer  takes  all  the  risk,  unless 
there  was  some  fraud  in  the  person  insuring,  either  by  his  suppress- 
ing some  circumstances  which  he  knew  or  by  alleging  what  was 
false.  If  the  person  insuring  knew  no  more  than  the  insurer,  the 
latter  takes  the  risk  (h). 

Mere  "  belief"  of  assured  that  life  in  good  health. — If  the  person  ef- 
fecting the  insurance  only  says  "  he  believes  "  the  person  whose  life 
is  insured  "to  be  in  good  health,"  knowing  nothing  about  it  nor 
having  any  reason  to  believe  the  contrary,  then,  though  the  person 
is  not  in  good  health,  it  would  not  avoid  the  policy,  because  the  in- 
surer takes  the  risk  upon  himself  (/). 
[*  154]  *  What  is  concealment. — If  a  man  purposely  avoids  answer- 
ing a  question,  and  thereby  does  not  sate  a  fact  which  it  is 
his  duty  to  communicate,  that  is  concealment.  Concealment,  prop- 
erly 60  called,  means  non-disclosure  of  a  fact  which  it  is  a  man's 
duty  to  disclose  (^).*' 

Condition  Misdescription. — The  condition  in  a  fire  policy  as  to 
misdescription  of  the  premises  applies  only  to  the  concfition  of  the 
premises  when  the  policy  begins  to  run.  If  the  description  is  not 
correct,  the  policy  does  not  begin  to  run  at  all,  or  only  as  to  parts 
unaflfected  by  the  breach  of  condition.  If  it  is  fully  performed, 
nothing  which  happens  afterwards,  nor  even  a  change  of  business, 
could  ( ffect  the  policy  as  to  that  condition  (I). 

If  there  is  fraud  in  a  representation,  it  avoids  the  policy  as  a 
fraud,  but  not  as  a  part  of  the  agreement  (m). 

Effect  of  misrepresentation  where  part  of  policy. — If  representations 
are  made  part  of  the  policy,  they  become  warranties;  and  if  they 
are  untrue,  the  policv  will  be  avoided,  even  if  the  loss  has  not  arisen 
from  the  f  ict  concealed  or  misrepresented  (n). 


(8tl 


(g)  London  Assurance  v 
)  Per  Ijord  Mansfield. 


bh  ed). 


Manael,  11  Ch.  D 
Jiossv.  Bradshaw, 


309,  per  Jessel,  M.  R. 


•*° 


Bl.  ai2,  2  Park  Ins.  934 


M.  R.,  48  L.  J 


(/)  Pawaon  v.  Watson,  2  Cowp.  787. 

(k)  London  Asmrance  v.  Maiisel,  11  Ch.  D.  870,  per  Jessel. 
Ch.  831,  27  W.  R.  444;  and  vide  supra,  p.  151,  per  Littledale,  J. 

(I)  Pint  V.  lieid,  0  M.  &  G.  I  (24),  12  L.  J.  C.  P.  *'99.  Hhaw  v.  Rohberds,  1 
N.  &  P.  279,  6  A.  &  E  75,  0  L.  J.  N.  S.  K.  B  100. 

(m)  Per  Lord  Mansfield.    Pawson  v.  Watson,  2  Cowp.  787. 

(n)  Maynardv.  Rhode,  1  Car.  &  P.  800,  5  Dowl.  &  Ry.  200. 

'Where  questions  in  application,  for  life  insurance,  appears  to  be  not  answered, 
or  to  bd  imperfectly  answered,  issue  of  policy  is  waiver  of  imperfection.  Phcenix 
Mut.  Life  Ins.  Co.  v.  Paddin,  120  U.  8  183. 

'In  aosence  of  fraud  applicant  will  not  bo  heard  to  say  that  certain  questions  in 
the  application  where  in  fact  not  asked.  Cuthbertson  v.  North  Carolina  Hume 
Ins.  Co.,  96  N.  C  480. 

140 


MISREPRESENTATION   AND  OONCEAIMENT. 


*156 


Mmepresentntion  by  insurer. — The  policy  would  equally  be  void  if 
the  insurer  misrepresented  or  concealed  a  material  fact;  as,  for  ex- 
ample, if  he  insured  a  ship  on  her  voyage  which  he  privately  knew 
to  be  arrived ;  and  an  action  would  lie  again'st  him  to  recover  the 
premium.  **  The  govering  principle,"  said  Lord  Mansfield,  "is  ap- 
plicable to  all  contracts  and  dealinofs.  Good  faith  forbids  either 
party,  by  concealing  what  he  privately  knows,  to  draw  the  other 
into  a  bargain  from  his  ignorance  of  that  fact  and  his  believing  the 
contrary  "  (o). 

^Statements  mtist  be  true  at  time  contract  of  insurance  a/:tuaUy  [*  155] 
made. — Statements  made  by  a  person  in  a  proposal  for  life 
assurance  must  be  true  at  the  time  at  which  the  contract  of  assur- 
ance is  actually  made.  Therefore  where  statements  regarding  the 
proposer's  health  were  to  be  taken  as  the  basis  of  the  contract,  and 
the  proposal  containing  them  was  accepted  upon  the  terms  that 
no  msurance  should  take  place  until  the  first  premium  was  paid, 
the  company  were  held  justified  in  refusing  to  accept  the  premium, 
a  material  alteration  having  occurred  in  tlie  proposer's  health  be- 
tween the  date  of  the  proposal  and  the  tender  of  the  premium  (p). 

Agent  of  assured  must  disclose  fully. — Any  person  acting  by  the  di- 
rection of  the  insured,  and  who  is  instrumental  in  procuring  the 
insurance,  is  bound  to  disclose  all  he  knows  to  the  insurers  before 
the  policy  is  effected,  and  where  any  misr^preeentation  arises  from 
his  fraud  or  negligence  the  policy  is  void  (g). 

Even  if  insurance  effected  by  another  agent. — The  insurance  is  also 
vitiated  if  there  be  misrepresentation  or  concealment  by  any  agent 
employed  by  the  assured  to  obtain  the  policy,  and  whose  duty  it 
was  not  to  have  so  misrepresented  or  concealed,  even  though  the 
policy  be  actually  effected  oy  another  agent  unaware  of  such  mis- 
representation or  concealment,  but  subsequently  to  the  receipt  of 
the  information  concealed  (r). 

Statements  by  life  assured. — If  before  a  policy  of  life  insurance  is 
effected  the  life  insured  is  applied  to  by  the  office  for  and  gives  in- 
formation, he  is  regarded  as  tne  agent  of  the  assured,  who  is  bound 
by  his  statements  even  though  the  assured  is  a  stranger  to  and 
acquainted  with  him ;  and  if  such  statements  are  false,  the  assured 
will  not  be  able  to  recover  from  the  insurance  office.  And 
this  is  so  although  the  assured  should  le  ive  it  to  the  *agent  [*  J56] 
of  the  insurance  office  to  obtain  the  information  («). 

Answers  given  by  the  life  insured  must  be  true. — An  insurance  was 
effected  by  a  creditor  on  the  life  of  his  debter,  who  gave  untrue 


m 


'f  .m 


■"^MSi 


0)  Carter  v.  Boehm,  3  Burr.  1910. 

[p)  Canning  v.  Farquhar,  16  Q.  B.  D.  (C.  A.)  727,  55  L.  J.  Q.  B.  225,  54 
L.  T.  350,  34  W.  R.  423. 

iq)  Fitzherbert  v.  Mather,  1  T.  R.  12.  Re  Universal  Non-Tariff  Fire  Co., 
Forbes'  claim  L.  R.  19  Eq.  48.'),  44  L.  J.  Ch.,  761,  2iJ  W.  R.  464. 

(r)  Blackburn  Low  ds  Co.  v.  Vigors,  17  Q.  B.  D.  (  C  A.)  568,  66  L.  J.  Q.  B. 
847,  54  L.  T.  852. 

(«)  Everett  v.  Desborough,  5  Bing.  603. 

.  141 


ti 


*157 


THE  LAWS  OF  INSURANCE. 


tr     1 


f.'.! 


I  ;:4 


answers  to  the  questions,  "  Who  is  your  medical  attendant?  Have 
you  ever  had  a  serious  illness  ?  "  The  creditor  was  ignorant  of  the 
misrepresentation,  and  the  debtor  did  not  die  of  the  disease  he 
was  then  afflicted  with ;  but  it  was  held  that  the  misrepresentation 
avoided  the  policy,  for  being  part  of  the  policy,  the  bargain  was 
only  conditional,  and  it  was  equally  a  condition  let  it  be  made  by 

whomsoever  it  may  (0-    ,  ,  ^  xi.  xu        •  j       . 

Mmq)resentation  through  agent  of  Company. — It  the  misdescrip- 
tion is  in  fact  due  to  the  act  of  an  agent  of  the  company,  even  if 
material,  it  will  not  affect  the  policy  (m). 

"  Spitting  blood  "  untrue  statement  regarding. — One  of  the  terms  of 
a  policy  of  life  assurance  was  that  it  should  be  void  if  anything 
stated  by  the  assured  was  untrue.  The  assured  stated  that  he  had 
not  had  any  spitting  of  blood,  and  the  Court  held  that  as  one  sin- 
gle act  of  spitting  of  blood  would  be  suflacient  to  put  the  insurers 
on  inquiry  as  to  the  cause  of  it,  the  fact  should  be  stated  (a;). 

Temperate  hahits. — Where  a  policy  of  life  assurance  is  effected, 
and  a  declaration  made  by  the  assured  that  the  person  whose  life 
is  insured  is  of  sober  and  temperate  habits,  upon  a  question  being 
raised  after  his  death  as  to  his  sobriety,  the  jury  have  to  say,  not 
whether  the  deceased  was  intemperate  to  such  a  degree  as  to  injure 
his  health,  but  whether  he  was  of  sober  and  temperate  habits  at 
the  time  of  the  insurance.  There  is  nothing  to  prevent  an 
[*  157]  office  from  stipulating  that  even  though  a  man's  health  *be 
not  impaired,  every  person  whose  life  is  insured  at  their 
office  shall  be  a  person  of  temperate  habits  (v). 

Proof  of  iniemperance. — Where  the  insured  has  warranted  him- 
self temperate  m  his  habits  and  that  he  has  always  strictly  been 
so,  the  insurers  must  (says  Lord  Blackburn),  to  successfully  resist 
payment,  *'  prove  drinking  carried  on,  before  the  date  of  the  war- 
ranty, to  such  an  extent  as  to  amount  to  intemperance,  and  so 
often  and  continuously  as  to  amount  to  habits  oi  intemperance. 
They  are  not  obliged  to  prove  anvthing  more."  In  the  construc- 
tion of  such  a  warranty  the  same  learned  lord  held  that "  we  must 
take  into  account  the  normal  habits  of  people  in  the  class  and  in 
the  locality  where  the  person  insured  lives '  (z). 

Meaning  of  "  under  influence  of  liquor.-^The  expression  "  under 
the  influence  of  liquor  "  in  an  accident  policy  means  "  that  a  man's 
conduct  is  banefully  influenced  by  the  liquor  he  has  drunk  "  (a), 
or  that  he  is  "  under  such  influence  of  intoxicating  liquor  as  dis- 


I'ltt 


l!    i 


li,;* 


(t)  Maynard  v.  Rhode,  1  Car.  &  P.  360,  5  Dowl  &  R.  266. 

(«)  Re  Universal  Non-Tariff  Fire  Co.,  Ex  parte  Forbes'  claim,  supra.  SotH' 
ers  V.  Athenceum,  &c ,  Co  ,  9  Lr.  Can.  Rep.  61,  3  Lr.  Can.  Jur.  67. 

(x)  Geach  v.  Ingall,  14  M.  &  W.  95,  16  L.  J.  Ex.  37,  9  Jur.  691. 

(y)  Southcomb  v.  Merriman,  Car.  &  Mar.  286. 

(«:).Per  Lurd  Blackburn,  Thomson  v.  Weem^s,  9  App.  Cas.  684.  TTccww  v. 
Standard.  <fec,  Co.,  21  Sc  L.  R.  791.  Lord  Watson,  however,  differed  as  to 
*' locality ;" 'see  p.  696. 

(o)  Macrobbie  v.  Accident  Insurance  Co  ,  28  Sc  L.  R.  891. 

142 


MISREPKE8ENTATI0N   AND  CONCEALMENT 


*158 


turbs  the  balance  of  a  man's  mind  or  the  intelligent  exercise  of  his 

faculties  "  (fr). 

A  provision  in  a  life  policy  that  the  assurance  should  "  not  ex 
tend  to  any  death,  or  injury,  happening  ^rV-ilst  the  assured  was 
under  the  influence  of  intoxicating  liquor  "  means  that  the  insur- 
ance will  not  extend  to  a  death,  or  injury  causing  death,  happen- 
ing whilst  the  assured  is  under  the  influence  of  intoxicating  liquor; 
and  therefore  it  would  suflice  for  an  insurer,  in  resisting  the  claim, 
to  show  that  the  assured  was  under  such  influence  when  he  re- 
ceived the  injury  from  which  death  afterwards  resulted  (c). 

Has  proposal  been  declined  by  any  other  office  ?  is  material  question. — 
The  question  "  whether  a  proposal  has  been  declined  by 
any  other  office "  is  a  material  one,  and  must  be  *truly  [*  158] 
answered  by  an  intending  assured,  otherwise  the  policy 
granted  to  him  will  be  void  (rf). 

Cmditicm.  Concealment.  Omission. — But  a  mere  omission  in  a 
proposal  to  fill  in  any  answer  to  a  question  whether  the  insured 
has  ever  been  a  claimant  on  a  fire  insurance  company,  he  having 
in  fact  been  so,  is  not  a  concealment  of  a  material  ract  (e).  The 
insurers  should  insist  on  an  answer,  as  the  grant  of  a  policy  with- 
out it  may  amount  to  a  waiver. 

Non-communication  of  former  illness. — A  policy  of  insurance  on 
the  life  of  another,  who  at  the-  time  of  the  insurance  is  in  a  good 
state  of  health,  is  not  vitiated  by  the  non-communication  by  such 
person  of  the  fact  of  his  having  a  few  years  before  been  afflicted 
with  a  disorder  tending  to  shorten  life,  if  it  appear  that  the  disorder 
was  of  such  a  character  as  to  prevent  the  party  from  being  conscious 
of  what  had  happened  to  him  whilst  suffering  under  it  (/).  Untrue 
but  innocent  statement  as  to  health. — An  untrue  statement  of  the 
assured  as  to  the  state  of  his  health,  if  made  in  ignorance  of  his 
true  physical  condition,  will  not  in  general  vitiate  the  policy  (g). 

Usual  medical  oMendant. — A  medical  man  who  has  attended  only 
once  ought  not  to  be  named  as  the  usual  medical  attendant  of  the 
person  whose  life  is  insured.  The  word  "  usual "  implies  having 
attended  more  than  once  (h). 

Reference  to  wrong  m£dical  mmi. — If  there  be  a  reference  to  a  man 
who  had  been  the  medical  attendant,  and  no  reference  to  the  per- 
son who  was  the  medical  attendant  of  the  life  insured  at  the  time 


i 


(b)  Mair  v.  Railway  Passengers'  Insurance^  37  L.  T.  856. 

(c)  Ibid. 

Id)  London  Assurance  v.  Mansel,  L.  R.  11  Ch.  D.  868,  48  L.  J.  Ch.  331,  27 
W.  R  444. 

(e)  London  and  Lancashire  Insurance  Co.  v.  Honey,  2  Victoria  Law  7. 

(/)  Swete  V.  Fairlie,  6  C.  &  P.  1. 

(o)  Fowkes  V.  London  and  Manchester  Insurance  Co ,  Sh.  T.  N.  S.  309,  32 
L.  J.  N.  S.  Q.  B.  168,  8  B.  &  S.  917,  11  W.  R.  622;  but  vide  Thomson  v.  Weems, 
9  App.  Cas.  684. 

{h)  Huckman  v  Furnie,  8  M.  &  W.  606,  620,  7  L.  J.  N.  S.  Ex.  168,  d 
Jnr.  444. 

148 


m 


■> 


1% 


>:m 


*160 


THE  LAWS  OF  INSURANCE. 


■;r 


■'II' 


:v^M 


■   1 


ti ; 


the  policy  was  effected,  such  an' omission  to  refer  to  the  proper  per- 
son would  vacate  the  policy  (i). 
r*  159]  *  Place  of  residence.  Assured  in  goal. — The  assured  being  in 
goal  at  Fisherton  Auger,  but  who  had  previously  lived  in 
her  own  house  at  the  same  place,  employed  an  agent  to  effect  a 
policy  of  insurance  on  her  life.  One  condition  of  the  insurance  was 
that  a  declaration  should  be  made  of  the  state  of  the  health  of  the 
life  insured,  and  the  agent  stated  that  he  had  proposed  on  behalf  of 
Elizabeth  Swayne  (the  assured)  of  Fisherton  Auger,  and  that  she 
wds  then  resident  there.  It  was  stipulated  that  the  policy  was  to 
be  valid  only  if  the  statement  were  free  from  all  misrepresentation 
or  reservation,  and  it  was  held  to  be  a  question  for  the  jury  whether 
the  imprisonment  was  a  material  fact,  for,  if  so,  the  keping  it  back 
would  be  fatal  to  the  recovery  of  the  money  from  the  insurance 
company  (k). 

Meaning  0/ "rm'denc^."— The  term  **  residence  "  in  the  proposal 
for  an  insurance  means  the  place  where  the  proposer  is  living  or 
residing  at  tlie  lime  of  making  the  proposal,  and  not  where  he  has 
been  residing  before  or  where  he  is  going  to  reside  afterwards; 
therefore,  where,  in  a  proposal  to  an  insurance  office  for  a  life  policy, 
the  proposer  gave  of  ilis  residence  the  address  where  he  was  then 
and  was  going  to  be  at  for  the  next  tliree  months,  although  he  usu- 
ally resided  in  Ireland,  and  returned  there  three  months  afterwards, 
it  was  held  tiiat  tlie  place  of  residence  was  not  untruly  stated  (/). 

Concealment  of  fire  to  adjacevit  premises. — The  plaintiff  having  one 
of  several  warehouses  next  but  one  to  a  boat-builder's  shop,  which 
took  fire  on  the  same  evening  after  that  fire  was  apparently  extin- 
guished, insured  that  warehouse  without  apprising  the  insurers  of 
the  neighboring  fire.  Though  the  terms  of  the  insurance  did  not 
expressly  require  the  communication,  it  was  held  that  the  conceal- 
ment of  this  fact  avoided  the  policy  (m). 
[*160]  ^Statement  partially  true. — A  statement  true  as  far  as  it  goes, 
but  not  the  whole  truth,  and  not  a  complete  answer  to  the 
question  which  it  proposes  to  answer,  is  untrue  within  the  meaning 
of  a  condition  that  "  any  untrue  statement  shall  avoid  the  policy 
(n).  But  where,  in  answer  to  a  question  as  to  the  name  and  resi- 
dence and  profession  or  occupation,  the  proposal  stated  "  A.  B.  of 
S.  Hall,  Esquire,"  the  person  being  an  ironmonger  though  resident 
at  S.  Hall,  and  being  also  an  e-quire,  the  statement  was  held  not  to 
be  untrue,  though  it  was  imperlect  (0). 

What  must  be  stated  under  the  general  question. — Under  the  general 


(i)  Everett  v.  Desborough,  5  Bing.  514,  per  Tindal,  C  J. 

Ik)  Huguenin  v.  Raglei/,  6  Taunt   18fi.  * 

(l)  Grogan  v.  London  and  Manchester  Industrial  Co.,  58  L.  T.  761. 

(tn)  Bufe  V.  Turner,  6  Taunt.  388. 

(n)  Cazenove  v.  Britinh  Equitable,  0  C  B.  N.  S.  437,  20  L.  J.  C  P.  100,  1  L. 
T.  N.  S.  484,  5  Jur.  N  S.  1309,  8  W   R.  243. 

(o)  Perrins  v.  Marine  and  General  Travellers,  2  E.  &  E.  317,  29  L.  J.  Q.  B. 
17,  24V,  2  L.  T.  N.  S.  688,  8  W.  R.  565,  0  Jur.  N.  S.  69.  627. 

144 


IM 


MISREPRESENTATION   AND  CONCEALMENT. 


*161 


question  put  by  an  insurance  office,  "  Is  there  any  other  circum- 
stiuice  wiihin  your  knowledge  which  the  directors  ought  to  be  ac- 
quainte(l  with  ?"'  it  is  the  duty  of  a  party  effecting  an  insurance  to 
communicate  to  the  office  information  of  every  f ".t  which  any 
reasomiltlc  man  would  think  material,  and  it  is  a  question  tor  the 
jury  whether  any  particular  fact  was  or  was  not  material  {p). 

Description  mbstantially  correct. — If  the  description  of  the  property 
be  suhstantially  correct,  and  a  more  accurate  statement  would  not 
have  varied  the  premium,  the  error  is  not  material;  hence  where 
buildings  were  described  as  built  of  brick  and  slated,  but  it  turned 
out  that  one  of  the  buildings  was  not  roofed  with  slate  but  with 
tarred  felt,  and  no  higher  premium  would  have  been  charged  if  the 
fact  had  been  disclosed,  it  was  held  that  the  misdescription  was  im- 
material and  not  sufficient  to  vitiate  the  policy  (g).  But  conceul- 
raen*    "  the  fact  that  a  wooden  building  behind  a  warehouse 

'  as  a  kitchen  has  in  Canada  been  *held  fatal  (r).  [*  161] 


was 


A  hy^.    jent  that  no  fire  is  kepttand  ho  hazardous  goods  de- 
posited refers  to  natural  use  of  fire  and  deposit  of  goods  (s). 

Effect  of  concealment  as  against  purchaser  without  notice. — Suppres- 
sion of  a  fact  material  to  the  insurance  company  to  know,  discovered 
between  the  acceptance  by  the  office  and  payment  of  the  first  pre- 
mium, will  avoid  the  policy  even  as  against  a  purchaser  for  value 
without  notice  (0- 

Misrepresentation  by  one  company  to  another  on  re-insurance. — And 
where  one  insurance  company  induced  another  insurance  company 
to  grant  a  policy  by  way  of  re-assurance  on  the  representation  that 
they,  the  former  company,  intended  to  retain  part  of  the  risk,  which, 
however,  they  subsequently  got  rid  of  by  a  further  re-assurance, 
the  policy  was  declared  void  (u). 

Effect  of  innocent  misrepresentation,  where  stipulation  that  untrue  state- 
ment should  forfeit  all  money  paid. — Where  it  was  stipulated  that  in 
case  of  an  untrue  statement  all  moneys  paid  on  account  of  the  in- 
surance should  be  forfeited  and  the  insurance  itself  should  be  null 
and  void,  both  the  policy-money  and  the  premiums  were  forfeited 
by  a  staternent  as  to  the  health  of  the  life  insured,  untrue  in  point 
o^fact,  though  not  within  the  knowledge  of  the  party  making  the 
statement  (a;). 

Disclosure  of  concealed  fact  before  payment  by  insurer. — If  although 
a  tnateriul  fact  were  misrepresented  or  suppressed  at  the  time  the 

(p)  Lindenau  v.  Desborovgh,  8  Q.  &  C  586.  London  Assurance  v.  Mansel, 
L  R  II  Ch  D.  a69,  48  1..  J.  Ch.  831,  87  W.  R   444. 

(g)  Re  Universal  Non- Tariff  Fire  Insurance,  Forbes^  claim,  L.  R.  19  Eq.  485, 
44  L.  J.  Ch.  761,  23  W.  R  465. 

(r)  liar.<i(don  v.  Royal,  15  Lr.  Can.  Rep.  1. 

(s)  Dobson  V.  Sotheby,  1  Mo.  &  M  90 

(<)  British  Equitable  v.  Great  Western  Railway  Co  ,  20  L.  T.  N.  S.  422,  88 
L.J.  N.  S  Ch.  H14,  17  W.  R.  561. 

(m)  Trail  v.  Banna,  4  Giflf.  485,  10  L.  T.  N.  S.  215,  88  L.  J.  Ch.  621,  12  W. 
R.  678 

(a;)  Ihtc.keit  v    Williams,  2  Cr.  A.  M.  348,  8  L.  J.  N.  S.  Ex.  141.  ',' 

10  PORTER  ON  INSURANCE.  146 


M 


•a 


Hfl 


-■h)^-^: 


i'lV 


♦163 


THE  LAWS  OF  INSURANCE. 


SI  fi 


PI 


f  '.I 


¥'  I 


insurance  was  effected,  it  was  disclosed  to  the  insurance  office  be- 
fore the  money  was  paid,  so  that  the  payment  was  made  by  thom 
with  full  knowledge  of  all  the  facts,  the  insurers  cannot  afterwards 

recover  the  money  back  (y). 
[*  162]  "^  Order  for  delivery  up  of  jMlky  on  ground  of  fraud.— The 
Courts  will  at  the  suit  of  the  insurer,  order  a  policy  to  be  de- 
livered up  to  becancelled  on  the  ground  of  fraudin  effecting  the  in- 
surance when  the  instrument  is  not  void  on  the  face  of  it ;  and  in  such 
case  the  plaintiffs  have  a  better  equity  if  they  brine:  their  action  in 
the  lifetime  of  the  assured  than  if  they  wait  until  after  his  death  (z). 

Private  knowledge  of  insurer  does  not  affect  asmred^a  duty. — The  as- 
sured cannot  lessen  his  obligation  to  disclose  a  fact  by  speculating 
on  what  may  or  may  not  be  in  the  mind  of  the  insurer,  or  as  to 
what  may  or  may  not  be  brought  to  his  mind  by  the  particulars 
disclosed  to  him  by  the  assured,  if  those  particulars  fall  short  of  the 
fact  whicli  the  assured  is  bound  to  communicate  (a). 

New  policy  issued  on  old  application. — If  a  policy  is  issued  and  de- 
clared conditional  on  the  truth  of  an  application  which  does  not  in 
fact  contain  a  just  and  true  exposition  of  all  requisite  facts  respect- 
ing the  condition  of  the  property,  and  subsequently  a  new  policy  be 
issued  at  a  reduced  premium  but  without  a  new  application,  the 
new  policy  will  also  be  conditional  on  the  truth  of  tho  old  ai)plica- 
tion  (b).  , 

A  room  described  as  a  ^^  dwelling  house." — When  a  man  has  only 
one  room  in  a  house  and  insures  his  goods  therein,  describing  the 
place  as  tho  dwelling-house  of  the  assured,  he  will  be  entitled  tore- 
cover  even  with  a  condition  that  the  house,  buildings,  or  other 
places  where  goods  are  deposited  shall  be  accurately  described, 
since  such  description  goes  to  the  structure  of  the  house  and  not  to 
the  interest  of  the  assured  therein  (c). 

Misdescription  of  prenmes. — The  building  or  other  place  where 
goodsarodepositedmustbecorrectlv  described  (d).    Butthe 
[*  163]  *wrong  description  arising  from  the  act  of  tho  insurers  or 
their  agent  is  no  defense  (e)  (•). 

The  condition  as  to  accurate  description  of  premises  relates  to 
their  construction  and  not  to  their  tenure  (/). 

Effect  of  misrepresentation  as  to  part  of  property  insured. — It  is  usual 

(y)  Bilbie  v.  Lumbey,  2  East  469.  Wing  v.  Harvey,  5  De  O.  M.  &  O  265,  -88 
L.  J.  Ch.  511,  23  L  T.  120,  18  Jur.  804,  2  W.  R.  870. 

ix)  Fenn  v.  Craig,  3  Y.  &  C.  Kx.  210,  8  Jur.  22. 

o)  Bates  v.  Hewitt,  L.  R.  2  Q.  B.  596.  .606,  8«  L.  J.  Q.  B.  282,  15  W.  R. 
1172.  ' 

(6)  Martin  v.  Home  Insurance  Co,,  20  U.  C  (C.  P.)  447. 

ic)  Friedlander  v.  London  Assurance,  1  Mo   &.  R.  171. 

(d)  Casey  v   Goldsmid,  2  Lr.  Can.  Ren.  kOO,  4  Lr.  Can  R'p.  107. 

(e)  Somera  v.  Athenatum,  9  Lr.  Can.  Rep.  61,  8  Lr.  Con.  Jur.  67.  London, 
Lieerpool  and  Globe  v.  Wyld,  1  Canada  (8.  C  )  604. 

(/)  Friedlander  V.  London  Assurance,  1  Mo  &  R.  171. 

(■')  Where  naent  knew  that  buildings  insured  where  not  entirely  itituotcd  on 
the  land  of  tho lirm.  Held  that  company  was  estopped  from  claiming  that  poUoy 
was  avoided.     German  Fire  Ins.  Co.  v.  Carrow,  21  111.  Appl.  OIU. 

146 


MISREPRESENTATION  AND  CONCEALMENT. 


*164 


to  stipulate  in  a  policy  that  misrepresentation  as  to  part  of  the 
property  insured  shall  avoid  the  policy  as  to  such  part.  In  Canada 
the  Courts  have  been  inclined  so  to  hold  indepenaently  of  the  con- 
dition (g).  The  question  seems  to  turn  on  the  divisibility  of  the 
contract.  When  there  are  two  express  subjects  of  insurance,  the 
house  and  the  goods  therein,  it  is  difficult  to  see  on  what  principle 
a  misrepresentation  as  to  incumbrances  on  the  house  should  avoid 
the  insurance  as  regards  the  house,  unless  some  special  (and  it 
would  be  very  harsh)  condition  were  made  to  that  effect  (h). 

Such  policies  have  been  held  in  several  cases  indivisible,  but 
they  contained  a  stipulation  that  "  the  policy,"  not  that  the  part 
relatins;  to  the  building,  should  be  void  in  the  event  which  hap- 
pened (0.  And  as  the  policies  in  question  were  not  for  two  dis- 
tinct considerations  '';  "•.  out  for  one  entire  consideration,  viz.,  the 
Srem: ..  -i  house  and  goods,  the  Courts,  in  the  absence  of  a  con- 
ition  v..«io  misrepresentation  as  to  part  should  avoid  the  policy  in 
part,  were  unable  to  assist  the  assured,  saying  that  where  in  a  pol- 
icy the  risk  is  distributed  between  the  two  subjects,  this  is 
merely  to  limit  the  liability  in  respect  of  each  part,  *not  to  [*  164] 
divide  the  contract  (k).  Where  house  and  goods  were  in- 
sured in  one  policy  for  a  gross  premium,  but  separately  valued,  a 
misstatement  as  to  the  ownership  of  the  house  was  in  New  York 
held  fatal  to  a  claim  for  loss  to  the  house,  but  it  was  also  held  that 
the  contract  was  divisible,  and  that  the  insured  could  recover  the 
loss  to  the  goods  (I). 

What  neither  party  need  m«n<Mm.— Either  party  may  be  innocently 
silent  as  to  grounds  open  to  both  to  exercise  their  judgment 
upon  (m). 

What  insured  need  not  mention. — The  insured  need  not  mention 
what  the  insurer  knows,  nor  what  he  ought  to  know,  nor  what  he 
takes  upon  himself  the  knowledge  of,  nor  what  he  waives  being  in- 
formed of,  nor  what  lessens  the  risk  agreed  and  understood  to  be 
run  by  the  express  terms  of  the  policy,  nor  general  topics  of  spec- 
ulation, as,  for  instance,  the  insurer  is  bound  to  know  every  cause 
which  may  occasion  natural  perils,  such  as  the  difficulty  of  the 
voyage,  the  kinds  of  seasons,  the  probability  of  lightning,  hurri- 
canes, earthquakes,  &c.  (n). 

(fl)  Butler  V.  Standard  Fire,  4  U.  C.  (A pp.)  899.  Rii^s  v.  Mutual,  Jtc,  Co., 
29  U.  C.  (Q.  B.)73. 

(A)  Phillipa  V.  Grand  River  Insurance  Co.,  46  U.  C.  (Q.  B.)  884,  per  Cam* 
eron,  J.,  8«8. 

(t)  Gore  District  Mutual  Fire  v.  Samo,  2  Canada  (S.  G.)  411.  Cashman'^* 
London  and  Liverpool  Fire,  5  Allen  (New  Bruiis  )  246. 

( ;■)  Hopkins  v.  J*rescott,  4  C.  B.  578,  591.  Harris  v.  Venables,  L.  R.  7  Ex, 
285,  240. 

(Ic)  Goie  Ifistrict  Fire  v.  Samo,  2  Canada  (8.  C.)  411,  per  Ritchie,  J.,  421,  29 
U.  C.  (C.  p.)  463, 1  U   C.  (App.)  545. 

m  Schuster  v  Dutchess  Ins.  Co.,  102  N  Y.  260. 

im)  Cartel'  v.  Boehm,  8  Burr.  1910,  per  Lord  ManRfield. 

(n)  Per  Lord  Manufield,  Carter  v.  lioehm,  X  Burr.  1910.  Bates  v.  liewUt, 
L.  R  2  Q.  B.  L05,  005,  86  L.  J.  Q.  B.  288,  U  W.  R.  1172. 

147 


"i^W 


166 


THE  LAWS  OF  INSURANCE. 


t*165] 


^CHAPTER  VIII. 


CONDITIONS  IN   POLICIES. 


:h- 


'i'fV. 


mv 


All  policies  contain  a  certain  number  of  conditions  declaratory 
of  the  terms  and  limitations  under  which  the  policy  is  granted, 
and  of  the  duties  of  the  assured,  and  to  some  extent  imposing  du- 
ties upon  him  in  excess  of  those  implied  by  law.  Some  such  con- 
ditions are  precedent  to  the  eflfectual  making  of  the  contract,  and 
if  they  are  not  satisfied,  the  policy  does  not  take  effect  at  all. 
Otliers  presuppose  the  contract  made,  but  are  precedent  to  the 
accrual  of  a  right  to  sue  thereon.  Others  declare  events  in  which 
all  right  under  the  contract  is  forfeited.  Others  deal  with  the  mode 
of  settling  disputes,  and  others  limit  the  period  for  bringing  a 
claim  (*). 

Forfeiture  Cy  pr^  doctrine  not  applicable. — The  rules  as  to  forfeit- 
ure of  real  estate  do  not  apply  to  forfeiture  under  conditions  in  a 
policy,  and  the  plain  words  of  the  policy  must  be  adhered  to  and 
followed,  and  performance  on  the  cy  pria  doctrine  will  not  suf- 
fice (a). 

Condition.  Waiver. — Non-performance  of  a  condition  contained 
in  a  ))olicy  makes  the  policy  voidable  at  the  election  of  the  insur- 
ers. They  may  waive  the  forfeiture,  or  by  their  conduct  after  no- 
tice of  the  breach  estop  themselves  from  setting  it  up.  "  The  word 
void  in  a  private  instrument  can  rarely  if  ever  exclude  the  possi- 
bility of  confirmation  "  (6). 
[*  166]  '^New  agreement  after  breach  of  condition. — A  new  agreement 
may  be  relied  on  either  as  waiver  of  a  breach  of  the  orig- 
inal contract  or  as  a  substituted  contract.  In  this  case  the  ques- 
tion by  whom  the  agreement  was  made  is  material,  since  some 
agents  of  a  company  may  have  an  authority  to  make  new  con- 
tracts which  others  have  not  (c). 

Mode  of  waiver. — When  a  breach  of  a  policy  not  under  seal  may 

(a)  Want  v.  Blunt,  13  East  188,  187,  per  EUenborough,  C  J.  Neill  v.  Union 
Mutual,  45  U.  C.  (Q  «.)  501,  «0n. 

(6)  Armstrong  v.  Turquand,  0  Ir.  C.  L.  82,  45,  per  Christian,  J.  Wing  v  Har- 
vey, f)  Do  O.  U.  265,  23  L.  J.  Cli.  611,  23  L  T,  120,  18  Jiir.  8»4,  2  VV.  11.  870. 
Canada  Landed  Credit  Co.  v.  Canada  Agricultural  Insurance  Co.,  17  Grant 
(U.  C.)  418. 

(<•)  Supple  V.  Cann,  9  Ir.  C.  L.  1.  British  Industry  Co.  v.  Ward,  17  C.  B. 
645.  052. 

( ' )  An  endorsement  on  the  back  of  a  policy,  not  being  referred  to  therein,  or 
in  the  by-laws,  is  no  part  of  the  policy  and  does  not  bind  tho  assured.  Planters^ 
Mutual  Ins.  Co,  v.  ^lowland,  00  Md.  286. 

148 


CONDITIONS  IN  POLICIES. 


[167 


be  waived  in  a  particular  way,  and  the  insurers  would  be  obliged 
to  waive  it  if  the  assured  performed  the  requisite  acts,  there  is 
nothing  to  prevent  the  insurer  from  waiving  the  breach  in  other 

ways  id). 

Resolution  to  pay  made  in  ignorance  of  breach  no  waiver. — Where 
the  assured  has  not  disclosed  incumbrances  on  the  property  in- 
sured as  required  by  a  condition  in  the  policy,  a  resolution  of  the 
directors  ot  the  company  to  pay  a  loss  under  the  policy  made  in 
ignorance  of  this  breach  of  condition  is  no  waiver  of  such  breach, 
and  they  are  free  to  rescind  the  resolution  and  defend  the  action  (e). 

Ompiromise  in  ignorance  of  facta. — So  also,  if  in  ignorance  of  a 
fraud  avoiding  the  policy  they  compromise  the  claim,  they  may 
get  the  compromise  set  aside  (e). 

Fire  policies.  Condition  as  to  misdescription  and  concealment. — 
Tliough  by  the  general  principles  of  inssurance  law  any  material 
misdescription  or  misstatement  of  or  omission  to  state  facts  mate- 
rial to  be  known  for  estimating  the  risk  avoids  a  policy,  most  fire 
policies  contain  an  express  condition  on  the  subject  (/). 

The  1st  condition  in  afire  policy  usually  (g)  declares  *that  [*  167] 
misdescription  of  tiie  building  or  place  to  be  insured  or 
in  which  goods  to  be  insured  or  contained,  and  any  misstate- 
ment or  omission  to  state  facts  material  to  bo  known  for  estimating 
the  risk,  shall  avoid  the  policy  as  to  the  property  affected  by  such 
misdescription,  misstatement,  or  omission. 

Condition.  Misrepresentation. — This  condition  deals  with  state- 
ments or  representations  relating  to  the  actual  position  and  char- 
acter of  the  premises  insured,  in  order  (as  the  insurers  themselves 
express  it)  that  their  agent  may  form  an  accurate  and  sound  opin- 
ion and  judgment  of  the  nature  and  extent  of  the  risk. 

The  general  law  of  insurance,  independently  of  the  condition, 
visits  any  material  misrepresentation  by  totally  exempting  the  in- 
surers from  liability,  because  all  that  is  to  be  done  on  one  side  is 
the  consideration  for  all  that  is  to  bo  done  on  the  other,  all  the 
promises  are  referred  to  all  the  considerations  (A),  but  the  condition 

[d)  Supple  V.  Cann,  9  Ir.  C.  L.  1. 

(e)  StaiiitoH  v.  Carron  Co.,  10  Jur.  N.  S.  873.  Dunnage  v.  White,  1  Swans. 
137.  Phillips  V.  Grand  River  Fire  Mutual  Insurance  Co.,  40  U.  C.  (Q.  B  )  334. 
Queen  Imurance  Co.  v.  Derinney,  25  Grant  (U.  C)  !J94,  a  very  full  case.  Her' 
cnles  Co.v.  Hunter,  16  C  S.  C.  (Ist  series)  800. 

(/)  Benson  v.  Ottawa,  43  U.  C  (Q  B.)  282. 

(jf)  Such  condition  usually  runs  as  follows: — "Any  material  misdescription  of 
any  of  the  property  proposed  to  bo  hereby  insured,  or  of  any  buildings  in  which 
property  to  be  bo  insured  is  contained,  and  any  misstatement  of,  or  omission  to 
Btale,  any  fact  material  to  l»o  known  for  estimating  the  risk,  renders  the  policy 
void  as  to  the  property  affected  by  buch  misdescription,  misstatement,  or  omission 
respectively." 

(A)  Per  Bramwell,  B.,  Harris  v.  Venable.t,  L.  R  7  Ex.  240.  Williamson  v. 
Commercial  Union,  20  U.  C  (C  P.)  691.  IHm  v.  Heid,  0  M.  &  0.  1,  0  Scott  N. 
R.  083,  12  L.  J.  C.  P.  299. 

149 


'm 


m 


♦  169 


THE  LAWS  OF  INSURANCE. 


provides  that  the  misrepresentation  shall  avoid  the  policy  as  to  the 
property  affected  thereby.  It  may  therefore  be  contended  that  un- 
der the  condition  the  contract  may  be  treated  as  divisible,  and  the 
benefit  therefore  be  lost  to  the  assured  only  so  far  as  regards  that 
part  of  the  property  affected  by  the  misrepresentation.  Such  a  re- 
sult would  make  the  operation  of  the  condition  more  favorable  to 
the  assured  than  that  of  the  Common  Law,  under  which  a  ma- 
terial misrepresentation  would  take  away  the  whole  benefit  of  his 

policy  (i) 
[*  168]  *The  2nd  provision  made  by  fire  conditions  is  as  to  the 
use  of  the  property  insured,  and  provides  against  increase 
of  the  risk  after  insurance,  unless  assented  to ;  also  that  property 
removed  from  the  place  where  the  risk  has  been  taken  to  any  other 
shall  cease  to  be  covered  on  such  removal  (k). 

User  of  things  insured.  Condition  as  to  alteration.  Removal. — Poli- 
cies cease  to  attach  to  goods  renioved  both  by  the  general  principles 
of  insurance  law  and  a  particular  condition,  which,  however,  pro- 
vides that  assent  or  sanction  of  the  insurers  may  be  obtained  and 
indorsed  the  policy.  In  some  cases  the  policy  even  provides  for 
the  covering  of  other  goods  or  risks  pending  its  term. 

Suspense  of  policy  during  forbidden  uses. — In  America,  conditions 
are  framed  dealing  specifically  with  rock  oils  and  volatile  oils  and 
burning  fluids,  forbidding  their  use  and  making  the  insurance  in- 
effectual so  long  and  only  so  long  as  the  forbidden  use  continues 
(I).  Policies  containing  such  conditions  are  not  avoided,  but  only 
suspended  during  the  presence  of  such  articles  on  the  insured 
premises. 

It  will  be  for  the  insurers  to  prove  the  character  of  the  substance 
in  respect  of  which  they  claim  such  exception  (m). 

Inapplicable  conditions. — Difficulties  may  bo  and  have  been  caused 
by  issuing  forms  of  policy  without  striking  out  those  conditions  in- 
dorsed on  the  policy  which  are  inapplicable  to  the  subject-matter 
insured,  but  leaving  the  (question  of  the  application  of  the 
[*  1G9]  conditions  to  the  proviso  (if  any)  *in  the  bocly  of  the  policy, 
"  That  this  policy  shall  be  suliject  to  the  several  conditions 


m 


SP: 


(t)  Cashman  v.  London  and  Liverpool  Co.,  5  Allen  (New  Bruns.)  246.  Gore 
District  Mutual  Fire  v.  Samo,  2  Cunuda  (S.  C.)  411. 

(k)  Such  conditions  are  usuully  as  follows:— "If  after  the  risk  has  been  under- 
taken by  the  insurers  anything  whereby  the  risk  is  increased  bo  done  to  iirojierly, 
or  to  or  upon  or  in  any  buildine  in  which  property  hereby  insurecl  is  contained,  or 
if  any  property  hereby  insured  be  removed  from  the  place  in  which  it  is  herein 
described  as  being  contained,  without  in  each  and  every  of  such  cases  the  assent 
or  fianction  of  the  insurers  signified  by  endorsement  hereon,  the  insurance  on  the 
property  affected  thereby  ceases  to  attach." 

(I)  Putnam  v.  Commonwealth  Lmtrance  Co.,  18  Blatch.  (U.  S.)  800,  and  cases 
there  cited. 

(m)  Buchanan  v.  Exchange  Fire  Co.,  01  N.  Y.  26.  Mear  v.  Humboldt,  87 
Am.  Rep.  047,  02  Penn.  St.  16. 

150 


CONDITIONS  IN  POLICIES. 


*170 


aud  regulations  herein  and  hereon  expressed  so  far  as  the  same  are 
or  shall  be  applicable"  (m)  (■). 

Thus  a  policy  framed  for  buildings  was  issued  to  cover  a  ship. 
The  7th  condition  stipulated  that  if  more  than  twenty  pounds  of 
gunpowder  should  be  on  "  the  premises  "  at  the  time  of  a  loss,  such 
loss  should  not  be  made  good.  And  the  Privy  Council  held  that 
the  word  ''  premises  "  must  be  taken  to  mean  the  ship  for  the  pur- 
poses of  the  said  policy,  and  that  the  word  having  a  clear  legal  mean- 
ing, viz.,  "  the  subject  or  thing  previously  expressed,"  no  evidence 
of  usage  as  to  carriage  of  gunpowder  in  ships  as  freight  was  admis- 
sible to  show  the  condition  inapplicable  to  a  steamer  {n). 

And  if  a  policy,  though  improper  in  form,  be  accepted  by  the 
assured,  he  must  be  taken  to  have  read  it,  and  it  is  just  that  he 
should  be  bound  by  the  proper  legal  construction  thereof. 

Increase  of  risk. — When  a  business  classed  in  the  memorandum 
on  a  policy  as  extra  hazardous  is  carried  on  after  insurance,  it  will 
avoid  the  policy,  and  the  verdict  of  a  jury  that  it  does  not  in- 
crease the  risk  will  be  set  aside  (o).  It  would  be  otherwise  if  the 
fact  that  the  company  considered  the  business  extra  hazardous  was. 
merely  in  the  instructions  to  agents  (2>). 

Change  of  business. — A  change  in  the  nature  of  the  business  car- 
ried on  in  the  assured's  premises,  whereby  the  risk  is  increased, 
and  without  proper  notice,  avoids  the  policy  (q),  ('),  even  where 
the  increased  rislc  is  caused  by  a  tenant  without  his  land- 
*lord\  knowledge  (r).  But  it  has  been  held  in  Canada  [*  170] 
that  notice  of  the  change  of  business  to  the  insurer's  agent, 
without  sending  in  the  policy  for  indorsement,  will  suffice  if  there 
be  no  condition  to  the  contrary  (s). 

Selling  liquor. — Selling  liquor  by  retail  has  been  held  in  Canada 
not  to  bo  an  increase  of  risk  where  a  policy  has  been  taken  out  on 
groceries  and  patent  medicines.  But  in  England  spirit-selling  is  a 
hazardous  trade,  and  a  grocer  could  not  become  a  liceneed  or  un- 
licensed retailer  of  spirits  without  risking  his  insurance  (t). 

(m)  Grandin  v.  Rochester  Co.,  J 07  Penns.  26. 

(n)  neacon  Life  and  Fire  C<>.  v.  Gibb,  1  Mooro  P.  C.  N.  S.  73,  7  L.  T.  N.  S. 
74,  11  W.  II  1!)4,  0  Jur  N.  S.  185. 

(o)  Merrick  v.  Provincial  Insurance  Co.,  14  U.  C.  (Q.  B.)  439. 
(j))  Samo  case. 

(q)  Shaw  V.  Robberds,  1  N.  &.  P.  270,  6  A.  &  E.  75,  G  L.  J.  N.  S.  K.  B.  100. 
(r)  Long  v.  Jiecber,  51  Am.  Rep.  532.    Liverpool  and  London,  die.,  Co.  v. 
Gttnther,  0  Davis  (Sup.  Ct.  U.  8.)  113. 
(.1)  Peck  V.  Phoenix  Mutual  limirame  Co.,  45  U.  C.  (Q.  B.)  C20. 

(t)  N/cholson  V.  Phmnix  Mutual,  45  U..C.  (Q.  B  )  TOO. 

*  Policy  on  a  hotel,  its  furniture,  &o ,  excepted  "goods  held  on  storage." 
Held  (hat  furniture  ntored  to  be  used  in  tlie  business  of  the  hotel  was  not  within 
the  exception.     Continental  Insurance  Co,  v.  Pitiitt,  05  Texas  125. 

'  Where  insurer  knows  that  premises  may  bo  used  for  storing  cotton,  and 
the  policy  Btipulates  that  "  when  building  is  u.sed  ns  a  warehouse  the  rate  will  bo 
changed'';  the  storing  of  cotton  will  not  avoid  policy.  Steers  v.  Home  Ina.  Co., 
86  La.  An.  052. 

m 


*171 


THE   LAWS  OF  INSURANCE. 


Tavern. — Change  of  occupation  from  a  private  house  to  a  tavern 
without  consent  of  the  insurance  company  would  avoid  the  policy 
under  the  condition  against  increasing  the  risk :  but  a  coffee-liouse 
tavern  after  a  change  to  Fome  other  equally  hazardous  business 
is  not  a  tavern  within  this  rule  (w) ;  and  if  the  change  be  to  a 
which  the  company  have  allowed,  the  policy  will,  it  seems,  hold 

Conditions  as  to  user  of  thing  insured.  Shaw  v.  Robherds. — One  of 
the  conditions  (3rd)  of  a  policy  was  that  unless  the  trades  carried 
on  be  accurately  described,  and  if  a  kiln  or  any  process  of  fire-heat 
be  used  and  not  noticed  in  the  policy,  the  policy  was  to  be  void ; 
and  another  condition  (6th)  stated  that  if  the  risk  should  be  by 
any  means  increased,  notice  was  to  be  given  to  the  ofl&ce,  otherwise 
the  insurance  to  be  void  (y).  The  assured  lent  his  kiln,  which  was 
used  only  for  drying  corn,  to  another  person  on  one  occasion  to 
dry  bark,  which  was  more  dangerous.  Change  of  use  with  increase 
of  risk. — No  notice  was  given  to  the  insurers,  and  the  kiln  was  de- 
stroyed.   It  was  held  that  the  3rd  condition  related  to  the  time 

of  insuring,  and  that  nothing  which  occurred  afterwards 
[*  171]  *could  bring  the  case  within  that  condition,  which  was  fully 

performed  when  the  risk  first  attached ;  that  the  6th  condi- 
tion pointed  to  an  alteration  of  business,  permanent  and  habitual; 
and  if  the  plaintiff  had  either  dropped  his  business  of  corn-drying 
and  taken  up  that  of  bark-drying,  or  added  the  latter  to  the  former, 
the  case  would  have  been  within  that  condition.  But  the  single 
act  of  kindness  was  no  breach  of  the  6th  condition,  and  the  plain- 
tiff was  allowed  to  recover  (2). 

Glen  v.  Letois.  Use  by  way  of  experiment  contrary  to  condition. — In 
Olen  V.  Lewis  (a)  the  question  Avas  whether  the  placing  a  small 
steam-engine  on  the  premises  and  using  it  in  a  heated  state  to  turn 
a  lathe  simply  for  the  purpose  of  ascertaining  by  the  experiment 
whether  it  was  worth  tne  plaintiff's  while  to  buy  it,  avoided  the 
policy,  having  regard  to  its  conditions,  one  of  which  was  that  in 
case  of  any  alteration  in  a  building  insured,  or  of  any  steam-engine, 
&c.,  or  any  other  description  of  fire-heat  being  introduced,  or  of  any 
trade,  business,  process,  or  operation  being  carried  on  ...  . 
notice  must  be  given,  and  every  alteration  be  allowed,  tfec,  other- 
wise no  benefit  should  arise  to  the  assured  in  case  of  loss.  Parke, 
B.,  in  giving  judgment,  said:  "The  clause  implied  that  the  simple 
introduction  of  a  steam-engine  without  fire  will  nft  affect  the  policy, 
but  it  will  if  fire  is  put  to  it.  It  makes  no  difference  whether  it  is 
used  on  trial  or  as  an  approved  means  of  carrying  on  the  parties' 
business,  nor  does  it  make  any  difference  that  it  is  used  for  a  longer 


t'l !  1 


I 


h)  Doe  d.  Pitt  v.  Lamina,  4  Camp.  78. 

x)  Campbell  v.  Liverpool  and  London  Fire.  13  Lr.  Can.  Jur.  801). 
(;/)  Sco  also  Jhbson  v.  Sothchji.  1  M.  k  M.  90.    Pirn  v.  Reid,  6  M.  &  0.  1,  12 


L.  J.  C.  P.  2{)»,  0  Scott  N.  U.  mi. 
(2)  Shaw  V.  Ilobberds,  1  N.  &  P.  270.  0  A.  &  E.  7fi,  0  L  J.  N.  S.  K.  B.  100. 
(a)  8  Ex.  C07,  22  L.  J.  Ex.  228,  21  L.  T.  115,  17  Jur.  842. 

152 


CONDITIONS   IN   POLICILS. 


* 


173 


or  a  shorter  time.  And  referring  to  Shaw  v.  Robberds,  the  learned 
Baron  said :  "  That  case  is  the  only  one  which  approaches  the 
present,  and  we  cannot  help  feeling  that  the  construction  of  the 
policy  in  that  case  may  have  been  somewhat  influenced  by  the  ap- 
parent hardship  of  avoiding  it  by  reason  of  the  accidental  and 
charitable  use  of  the  kiln,  the  subject  of  the  assurance.  If 
*in  that  case  the  condition  has  been,  inter  alia^  that  no  bark  [-1*  172] 
should  be  dried  in  the  kiln  without  notice  to  the  company, 
which  would  have  resembled  this  case,  we  should  have  been  far  from 
thinking  that  the  Court  would  have  held  that  the  drying  which 
took  place  did  not  avoid  the  policy,  by  reason  of  its  being  an  ex- 
traordinary occurrence  or  an  act  of  charity.  We  are  therefore  of 
opinion  that  the  defendant  [tlie  insurance  company]  is  entitled  to 
judgment." 

Oven. — Building  an  oven  on  premises  insured,  if  it  be  safely  built 
and  there  is  no  evidence  to  show  that  it  increases  the  risk,  will  not 
prevent  the  assured  from  recovering  the  insurance-money  (6). 

Erection  of  engine. — Where  the  insured  put  up  an  engine  in  a  brick 
house,  and  the  insurer's  agent  gave  notice  that  increased  premium 
would  be  required,  and  assured  applied  to  his  insurers  and  else- 
where for  insurance  thereon  at  enhanced  premium  and  was  refused, 
ho  was  nonsuited,  on  the  ground  that  the  policy  was  known  by  him 
to  be  void  (c). 

Non-occupation  increasing  risk. — Leaving  the  premises  unoccupied 
may  increase  the  risk,  and  if  it  does  will  be  within  this  condition. 
Whether  non-occupation  lessens  or  increases  the  risk  depends  on 
circumstances.  The  whole  question,  which  does  not  seem  to  have 
arisen  here,  is  very  fully  considered  in  a  Canadian  case  (rf),  where 
the  American  cases  are  cited  and  discussed. ' 

Ceasing  to  occupy  without  fraudulent  intent  has  been  held  in 
New  Brunswick  not  to  come  within  a  condition  avoiding  the 
policy  in  case  of  increase  of  *risk  through  change  ot  occupa-  [*  173] 
lion,  unless  proof  were  given  that  under  the  circumstances 
nnd  position  of  the  building  it  was  more  liable  to  destruction  when 
unoccupied  (e). 

Empty  home. — Notice  of  vacancy  if  required  by  a  condition  must 

(6)  Nmtghter  v.  Ottawa  Agriultural  Insurance  Co.,  4n  U  C.  (Q.  B.)  131.  Hil- 
km  V.  Thornton,  3  E.  cV  B.  808,  23  L.  T.  187,  18  Jur.  748,  '2  W.  U  5»4,  2:)  L.  J. 
Q.  n.  302.  Barett  v.  Jermi/,  3  Ex.  535,  18  L.  J.  Ex.  215.  Glen  v.  Lewis,  23 
L  J.  Ex  228,  17  Jur.  842,  8  Ex.  C07,  21  L  T.  115.  Stokes  v.  Cox,  1  H.  &  N. 
63:?,  2(5  L.  J.  Ex    118,  28  L.  T.  101,  8  Jur.  N.  S  45,  3  W.  R.  89. 

(r)  Iteidv.  Gore  District  Mutual,  11  U  C.  (Q.  B.)  345. 

[d)  Abrahams  v.  Agricultural  Insurance  Co.,  40  U.  C.  (Q.  B.)  175.  And  see 
Bennett  v.  Agrindtural  Co.,  CO  Conn.  420. 

(e)  Fo^  V.  Etna,  itc,  Co  ,  8  Allen  (New  Bruna,  29. 

(/)  Canada  Agricultural  Credit  Co.  v.  Canada  Mutual  Fire  Co.,  17  Grant 
(U.  C.)  418. 

*  Where  i)oHcy  provides  tliat  company  shall  not  be  liable  while  "premiums" 
are  unoccupied,  if  loss  occurs  while  house  was  unoccupied,  except  by  a  few  uten- 
silsj  no  recovery  can  be  had,  even  Ihoujrh  (ho  land  particularly  described  in  the 


>'t1 


aki 


policy  was  occupied.    Sexton  v.  Uawkeye  Ins.  Co.,  09  Iowa  09. 


153 


':=  174 


THE  LAWS  OF  INSURANCE. 


I        i 


be  given  in  reasonable  time.    Three  days  will  not  be  too  long  (/), 

change  of  occupancy.— Description  of  the  building  insured  as  a 
farm-house,  the  column  for  the  name  of  the  occupants  being  left 
blank  and  the  premises  being  at  the  time,  and  remaining  until  the 
loss,  unoccupied,  is  no  breach  of  a  condition  to  give  notice  of  a 
change  of  occupancy  ig).  ,     ,         , 

Condiium  as  to  disclosing  other  insurance  must  be  observed. — The  im- 
portance of  being  informed  of  the  names  of  the  offices-  which  are 
jointly  interested  in  a  risk  is  obvious  to  all  who  have  any  ac- 
quaintance with  the  law  and  practice  of  insurance,  and  nothing, 
therefore,  can  be  more  reasonable  than  that  the  persons  assuring 
should  stipulate  for  information  being  given  as  to  the  offices  in 
which  other  insurances  are  existing  or  are  subsequently  taken  out; 
and  it  is  competent  for  them  to  stipulate  that  if  any  erroneous  or 
untrue  representation  be  made  on  this  point  the  policy  shall  be 
void,  and,  if  they  do  so,  the  Courts  cannot  hold  any  part  of  the 
representation  immaterial  (A).  But  if  they  want  the  information 
they  must  stipulate  for  it  (i);  and  failure  to  disclose  it  is  not 
fraud  (k). 

Breacn  of  a  condition  that  other  insurance  shall  be  notified  to 

the  grantor  of  a  particular  policy,  and  notice  thereof  in- 

[*  174]  dorsed  on  the  policy  or  otherwise  recognized  *by  the 

grantor,  is,  unless  waived,  absolutely  fatal  to  any  claim  on 

the  policy. 

Tlie  condition  can  be,  of  course,  broken  only  by  the  failure  to 
disclose  insurance  in  companies  other  than  that  by  which  the  pol- 
icy containing  it  is  granted  (I),  and  by  policies  actually  on  a  por- " 
tion  of  the  same  risks  (m). 

Policy  accidentally  over  lapping. — A  mere  possibility  that  some 
portion  of  the  risk  covered  by  both  policies  might  accidentally 
coincide  would  not,  it  seems,  constitute  such  a  double  insurance  as 
is  meant  by  this  condition  (n).    The  existence  of  a  marine  policy 

(0)  Loudon  and  Lancashire  Co.  v.  Honey,  2  Victoria  Law  7. 

(k)  Parsonn  v.  Standard  Co ,  4  U.  C.  (App.)  '<  26.  Western  Assurance  Co.  v. 
Attwell,  2  Lr.  Can  Jur.  181. 

(i)  M-Doiiell  V.  Beacon  Fire  and  Life,  7  U.  C.  (C  P  )  308. 

(k)  Similar  conditions  are  found  in  some  English  policies,  but  have  not  been 
litigated. 

(1)  Citizens^  Company  of  Canada  v.  Parsom,  7  App.  Cas.  00,  118. 

(m)  Australian  Agricultural  Co.  v.  Saunders,  L.  R.  10  C.  P.  668,  44  L.  J. 
C.  P.  391,  33  L.  T.  N.  S.  447. 

(h)  Per  Bramwell,  B.,  in  case  last  cited,  L.  R.  10  C.  P.  674. 

'  Tenant  moved  on  Tuesday  and  owner  toolc  pos.sessjon  on  Wednesday,  and 
until  Friday  evening  was  engaged  in  preparing  it  for  occupation,  intending  to 
move  into  it  on  Saturday.  Friday  night  house  burned.  Hetd,  that  policy  was 
not  avoided  on  the  ground  of  it  being  vacant  or  unoccupied.  Eddy  v.  Hawkeye 
Ins.  Co.,  70  Iowa  472. 

"  Policy  insuring  hog  house,  conditioned  to  bo  void  if  premises  become  va- 
cated by  removal  of  owner  or  occupant,  is  not  avoided  by  tho  fact  that  use  of  hog 
bouse  as  such  is  discontinued.    Kimball  v.  Monarch  Ins.  Co.,  70  Iowa  618. 

154 


CONDITIONS  IN  POLICIES. 


*175 


on  goods  which  are  landed  and  warehoused  for  a  special  purpose 
will  not  vitiate  a  fire  policy  made  on  them  by  breach  of  this  con- 
dition, as  the  underwriters  would  not  be  liable  while  the  goods 
were  so  warehoused  (o). 

Condition  oa  to  suhsegiient  insurance. — An  insurance  effected  subse- 
quently to  the  policy  sued  upon  in  another  company  in  substitu- 
tion for  a  lapsed  policy  to  the  like  amount  in  a  third  company 
does  not  avoid  the  policy  sued  upon  under  a  condition  as  to  giving 
notice  of  a  subsequent  insurance,  if  the  grantors  thereof  have  had 
notice  of  the  lapsed  policy  if  existing  when  their  policy  was  granted 
or  have  recognized  it  if  granted  after  their  own  (p). 
•  Subsequent— further. — Subsequant  insurance  may  be  treated  as 
meaning  subsequent  and  further,  an  addition  which  seems  in  ac- 
cordance with  common  sense  ( p  ). 

But  if  the  assured  takes  out  a  policy  in  a  bad  company,  in  sub- 
stitution for  one  lapsed  in  a  good  company,  some  increase  of  a 
liability  to  contribute  might  arise  to  other  companies. 

^Condition  against  double  insurance. — It  has  been  held  in  [*  175] 
Canada  that  where  two  insurances  were  made  on  the  same 
property  with  one  person,  agent  of  two  companies,  the  companies 
would  not  be  estopped  from  setting  up  the  condition  vitiating  their 
policies  in  the  case  of  other  insurance,  on  the  ground  that  the 
knowledge  of  the  agent  could  not  here  be  deemed  knowledge  of 
the  principal  (  p ).  But  if  the  doctrine  laid  down  in  Blackburn  v. 
Vigtyrs  (  ^  )  is  to  apply  alike  to  insurer  and  assured,  this  Canadian 
view  seems  wrong. 

Other  insurance. — An  omission  to  give  the  names  of  other  offices 
in  which  the  applicant  is  insured  will  avoid  any  policy  granted  on 
the  application  where  there  is  a  condition  to  that  effect  (r). 

Where  it  is  stipulated  that  such  other  insurances  must  be  allowed 
by  indorsement,  no  action  will  lie  on  the  policy  containing  such 
term  till  the  indorsement  has  been  made,  whatever  be  the  equita- 
ble remedy,  since  the  indorsement  is  agreed  evidence  of  the  in- 
surer's assent  to  other  insurances  (?),  (*). 

Notice  of  other  insurance. — Verbal  notice  to  the  insurer's  agent 
will  not  bind  the  insurer,  and  the  assured  is  not  entitled  to  insist 
upon  a  reform  of  the  policy  by  an  indorsement  of  the  insurance  of 

(o)  Ibid. 

(p)  Parsons  v.  Standard  Insurance  Co.,  4  U.  C.  (App.)  826.  Pacaud  v. 
Monarch  Insurance  Co.,  1  Lr,  Can.  Jur  284. 

in )  Shannon  v.  Gore  District  Mutual,  2  U.  G.  (App.)  806. 
q)  17  Q  B  D.  553. 
r)  Citizens''  Insurance  Co.  v.  Parsons,  7  App.  Cos.  118.   Parsons  v.  Standard 
Co.,  4  U.C.  (App.)  826. 

(«)  Noad  V  iTovindnl  Insurance  Co,  18  U.  C.  (Q.  B.)  584.  Chapman  v. 
Lancashire  Co ,  13  Lr.  Can.  Jur.  30,  2  Stevens  Quebec  Digest  407  (P.  C). 

'  Where  a  condition  requires  tbat  additional  insurance  must  be  consented  to 
in  writing,  if  a  waiver  is  relied  upon  it  must  clearly  appear  that  notice  was  given 
and  indefinite  conversation  is  not  sufficient  to  constitute  waiver  New  Oneana 
Ins.  Assn  v.  Griffin.  66  Tex.  232.  Ooldvoater  v.  Liverpool,  and  London,  and 
OMe  Ins.  Co  ,  80  Huq.  N.  Y.  176. 

155 


1  m 


*176 


THE  LAWS  OF  INSURANCE. 


|i  '■ 


which  he  has  given  merely  verbal  notice,  as  this  would  be  compel- 
ling their  assent,  which  was  ex  hypothesi  in  their  discretion  (0,  (•). 

A  consent  signed  by  the  secretary  has  been  held  ^  to  bind  the 
company  (m),  but  this  must  depend  upon  the  authority,  actual  or 

constructive,  given  to  the  secretary. 
[*  176]     ^Waiver. — If  the  company  has  been  informed  by  the 
agent  of  the  other  insurance,  and  knowing  of  it  issues  a 
policy,  they  will  be  taken  to  have  waived  the  condition  {x). 

The  condition  will  not  be  deemed  waived  if  the  i  usurers,  on  get- 
ting notice  after  the  fire,  reserve  the  objection  till  action  brought  (2/). 

Mortgagee  of  mutual  policy. — In  a  mutual  insurance  company 
when  a  policy  is  assigned,  with  consent  of  the  insurer,  to  a  mort- 
gagee, thougn  he  becomes  a  member,  further  insurance  by  the 
mortgagor,  which  the  mortgagee  did  not  know  of  and  could  stop, 
will  not  affect  his  policy  under  the  condition  relating  to  double  in- 
surance (z). . 

Foreign  company. — If  further  insurance  be  effected  in  a  foreign 
company,  it  is  still  such  an  insurance  as  to  avoid  a  policy  contain- 
ing a  condition  against  double  insurance,  being  an  insurance  in 
fact(o),(*).  - 

Mortgagee. — Insurance  made  by  a  mortgagee  without  the  knowl- 
edge of  the  mortgagor  will  not  avoid  a  policy  taken  out  by  the  lat- 
ter and  containing  such  a  condition,  for  the  further  assurance  must 
be  by  same  person  or  in  the  same  interest  (h). 

Interim  receipt — Insurance  by  interim  receipt  may  fall  within  the 
provision,  as,  the  duration  of  the  interim  insurance  being  limited, 
the  question  has  been  raised  whether  after  expiry  of  the  time  lim- 
ited the  assured  was  entitled  to  have  a  policy  or  not,  since  if  he 
was  it  would  be  a  case  of  other  insurance  (c). 


{t)  Billington  v.  Provincial  Insurance  Co.  2  U.  C.  (App.)  158,  3  Canada  182. 

(m)  Attwell  V.  Western,  2  Lr.  Can.  Jur.  181.  Soupras  v.  Mutual  Insurance 
Co  ,  1  Lr.  Can.  Jur.  197,  a  case  of  notice  given  after  fire.  Chalmers  v.  Mutual 
lire  Co.,  3  Lr  Can.  Jur.  2. 

{x)  Billington  v.  Provincial,  2  U.  C.  (App.)  158,  178,  3  Canada  182. 

{y)  Attwell  V.  Western  Insurance  Co.,  2  Lr.  Can.  Jur.  181. 

Iz)  Mechanics'  Ben^t  Society  v.  Gore  District  Insurance  Co.,  40  U.  C.  (Q.  B.) 
220,  236-8. 

(a)  Ramsay  Cloth  Co.  v.  Mutual,  &c.,  Co.,  11  U.  C.  (Q.  B.)  516. 

(ft)  Gilchrist  v.  Gore  District,  Ac,  Co.,  34  U.  C.  (Q.  B.)  15.  Carpenter  v. 
Prondence  Washington  Co  ,  16  Peters  (U.  S.)  501.  Kelly  v.  JAverpool,  London 
and  Globe,  2  Han.  (New  Bruns.)  266.  Johnson  v.  North  British  and  Mercan- 
tile, 1  Holmes  (C.  Ct.  U.  S.)  117. 

{c)  Ilatton  V.  Beacon,  16  U.  C.  (Q.  B.)  817.  Bruce  v.  Gore  District  Mutual 
Co.,  20  U,  C.  (C.  P.)  207.    Mason  v.  Andes  Co.  23  U.  C.  (C.  P.)  87. 

*  An  applicant  told  agent  that  he  meant  to  obtain  further  insurance  in  other 
comnanies  and  asked  him  to  so  notifv  the  company.  Agent  replied  that  it  would  be 
needless  until  such  insurance  was  obtained.  Held,  that  the  company  was  estop- 
ped from  denying  liability,  on  the  ground  that  its  policies  forbade  additional  insur- 
ance without  Its  consent.    Kitchen  v.  Hartford  Fire  Ins:  Co.,  57  Michigan  135. 

'  There  is  no  double  insurance  where  lessor  obtains  insurance  on  a  building, 
and  lessee  on  machinery.    Flantera^  Hut.  Ins.  Co.  v.  Rowland,  66  Md.  286. 
156 


CONDITIONS  IN  POLICIES. 


*178 


♦That  the  assured  so  thought  is  evidence  as  to  the  bona  [*  177] 
Mes  of  the  assured  in  his  dealings  (rf). 

Other  insurance  on  part  of  property. — If  the  assured  take  the  benefit 
of  another  policy  on  part  of  the  same  premises  but  not  effected  by 
him  he  will  avoid  the  first  policy  where  notice  has  not  been  given  (e). 

Cmditum  against  other  insurance  without  notice.  Assignee  in  bank- 
fy,ptaj. — A  condition  in  a  i)olicy  avoiding  it  if  the  assured  or  his  as- 
signee should  effect  other  insurance  and  not,  with  reasonable  dili- 
gence, give  notice  and  have  it  endorsed  on  the  policy,  binds  the  as- 
signee in  bankruptcy  of  the  assured.  Bankruptcy. — By  the  bank- 
ruptcy he  becomes  owner  of  the  whole  insurance  effected  by  the 
bankrupt  for  the  benefit  of  the  estate.  His  8ul>sequent  insurance 
in  his  own  name  with  another  company  would,  if  recoverable,  enure 
to  precisely  the  same  interests;  and  the  bankrupt's  resulting  interest 
in  any  surplus  of  his  estates  after  all  debts,  &c.,  are  paid  would  be 
precisely  the  same  under  both  i)olicies  (/). 

Who  may  waive. — Such  condition  cannot  be  waived  by  an  ordi- 
nary agent  where  the  consent  is  to  be  written  on  the  nolicy  (gr).  An 
inspedtor,  whose  duties  are  to  examine  into  the  circumstances,  ad- 
just the  loss,  and  settle  and  report,  is  not  an  agent  who  can  give 
such  consent  (Ji).  He  might  waive  a  condition  as  to  a  written 
statement  of  the  loss,  that  being  within  the  scope  of  his  duties. 

Prior  to  subsequent  policy. — Provisions  avoiding  a  policy  for  not 
disclosing  other  insurance  apply  to  other  insurance  prior  or  subse- 
quent to  that  in  the  policy  containing  the  stipulation.  A 
man  may  therefore  avoid  two  policies  by  not  giving  *notice  [*  178] 
to  the  grantors  of  each  as  to  the  existence  of  the  other.  But  in 
America  it  has  been  held  that  if  the  assured  could  never  have  recov- 
ered on  the  policy  of  later  date  the  prior  policy  is  not  avoided  (i). 

Policies  promised  but  not  actually  issued. — When  a  man  seeks  fur- 
ther insurance  and  notifies  the  previous  insurance,  and  his  applica- 
tion is  accepted  and  his  premium  paid,  but  the  policy  not  issued 
before  a  loss  occurs,  the  second*  insurers  cannot  object  that  the 
policy  if  issued  would  have  contained  a  condition  against  further 
msurance  unless  indorsed  (k),  ("). 

What  things  covered  by  policy. — An  ordinary  fire  policy  only  covers 
property  in  which  the  assured  has  a  beneficial  interest,  and  by  its 
condition  excludes  property  held  on  trust  or  commission  unless  ex- 


(d)  Greet  v.  Citizens,  5  U  C.  (App.)  596. 


(e) 
(/) 


P.)  55 


D^oe  V.  Johnstown  Mutual  District  Insurance  Co.,  7  U.  C.  (C. 
Jackson  v.  Forster,  2  E.  &  E.  463,  29  L  J.  Q.  B.  8,  33  L.  T.  290,  7  W. 
R.  578.    Schondler  v   Wace,  1  Camp.  487.    Dickson  v.  Provincial  Instirance  Co., 
24U.  C.  (C.  P.)  157,  168. 
((/)  Gale  V.  Lewis,  9  Q.  B.  730,  16  L  J.  Q.  B  119. 
(h)  Mason  v.  Hartford  Fire,  87  U.  C  (Q.  B  )  437. 
(i)  Stacey  v.  Franklin  Fire,  2  Watts  &  Serg.  (Penn.)  506. 
Uc)  Bailev.  St.  Joseph  Fire  Co.^  73  Missouri  871. 

'"Provision  in  policyrendaring  it  voifl  in  case  of  other  insurance  does  not  ap- 
ply when  the  other  insurance  previously  effected  was  void,  because  of  a  violatioa 
of  a  condition.    Stevens  v.  Citizens^  Ins.  Co ,  69  Iowa  668. 

167 


;■!:*■!, 


Vi  c 


*  J79  THE  LAWS  OF  INSURANCE. 

pressly  described  as  such  (0-  Sundry  articles  of  household  furni- 
ture are  frequently  excluded  from  insurance,  either  from  their  fra- 
gility of  the  difficulty  of  valuing  them,  and  insurers  will  not  take 
on  any  terms  risk  of  destruction  of  deeds,  bonds,  bills  of  exchange, 
promissory  notes,  money  securities,  or  books  of  account.  Many 
persons  effecting  insurances  have  not  the  slightest  consciousness 
that  their  most  valuable  household  effects,  such  as  pictures,  piano, 
prints,  jewels,  clocks,  and  watches,  are  wholly  uncovered,  unless 
specially  mentioned,  and  that  the  policy  does  not  cover  the  clothes, 
&c.,  of  their  guests  or  servants,  unless  special  stipulation  be  made 

that  to  effect  ("). 
[*  179]  '"^Spontaneotis  cffmbmtion. — The  risk  of  damage  to  property 
occasioned  by  its  own  spontaneous  fermentation  or  combus- 
tion is  also  excluded  by  provision.  But  this  condition  only  affects 
the  particular  property  in  which  the  spontaneous  action  arises, 
and  does  not  remove  liability  for  other  goods  ignited  thereby. 

Condition  as  to  interest  insured. — Some  cases  which  at  first  sight 
seem  bailments  on  trust  are  by  their  particular  circumstances  Teally 
transfers  for  value  on  special  terms  as  to  the  mode  of  setllifig  the 
accounts  between  the  parties.  Where  this  is  so  the  policy  will  not 
be  void  for  not  disclosing  the  nature  of  the  title  of  th©  hssured,  as 
the  property  is  not  held  on  trust  or  commission  within  the  mean- 
ing of  the  condition  requiring  property  so  held  to  be  specifically 
insured  or  described  (wi). 

Such  is  the  case  with  millers  receiving  wheat  from  different 
farmers,  which  wheat,  by  the  consent  of  the  farmers,  was  mixed 
with  other  wheat  and  became  part  of  the  miller's  current  stock  to 
grind  or  to  sell,  subject  to  a  right  in  the  farmer's  at  any  time  (n). 
So  also  with  commission  merchants  who  receive  and  store  grain  in 
elevators  and  give  receipts,  but  are  not  bound  to  do  more  than  de- 
liver a  liko  quiintity  and  quality  of  wheat  (o). 

Riot.    Invasion.    Rebellion. — Risk  by  riot,  civilcommotion,  inva- 

{l)  "This  policy  does  not  cover  property  held  on  trust  or  on  commission,  unless 
expressly  described  as  such  ;  nor  china,  glass,  looking-glasses,  jewels,  clocks, 
watches,  trinkets,  medals,  curiosities,  government  stamps,  prints,  pain  tings,,  draw- 
ings, sculptures,  musical,  mathematical,  or  philosophical  instruments,  patterns, 
models,  or  moulds,  unless  specially  mentioned  in  the  policy,  nor  deeds,  bonds, 
billa  of  exchange,  promissory  notes,  securities  for  money  or  books  of  account,  nor 
gunjiowder,  nor  loss  or  daiUHge  by  fire  to  property  occasioned  by  its  own  sponta- 
neous fermentation  or  heating,  or  by  or  through  invasion,  foreign  enemy,  riot, 
civil  commotion,  or  military  or  usurped  power,  nor  loss  or  damage  by  explosion, 
except  loss  or  damage  by  explosion  of  gas  in  the  premises  referred  to  in  this 
policy,  not  forming  part  of  any  gas-works. 

(m)  South  Australian  Insurance  Co.  v.  Randall,  L.  R.  3  P.  C.  101,  6  Moore 
P.  C.  N.  S  i!41,  22  L.  T.  N  S  843. 

(n)  Same  case. 

(o)  Baxter  v.  Hartford  Fire  Co.,  11  Bissell  (U.  S  Circ.  Ct.)  808. 

**  Policy  insuring  brick  store,  excepted  "fences  and  other  yard  fixtures,  side- 
walks, store  furniture  and  fixtures  "  held  to  cover  wooden  shea  or  awning  in  front 
of  building,  supported  on  pillars  sunk  in  ground,  with  rafters  extending  into  brick 
wall ;  but  shelving  in  house,  and  an  office  enclosed  with  railing,  are  "store  fix* 
tares"  within  the  exception.    Commerddl  lire  Jns,  Co.  v.  AUcUf  80  Ala.  671. 

158 


CONDITIONS  IN  POLICIE& 


*181 


sion,  foreign  enemy,  military  or  usurped  power  is  expressly  ex- 
cepted in  most  if  not  all  fire  policies.  Civil  commotion  is  defined 
by  Lord  Mansfield  as  an  insurrection  of  the  people  for  general  pur- 
poses of  mischief  not  amounting  to  a  rebellion,  since  no  power  is 
usurped  (p). 

Where  a  party  of  men  came  to  a  coal-mine,  fired  *shot8  [*  180] 
and  drove  away  the  watchman,  and  set  fire  to  premises,  this 
loss  was  in  Pennsylvania  held  within  the  exception  against  riot 
(q).  The  recent  Riot  (Damages)  Act,  1886  (r),  gives  compensation 
out  of  the  police  rates  where  a  house,  ship,  or  building,  in  any  po- 
lice district,  has  been  injured  or  destroyed,  or  the  property  therein 
has  been  injured,  stolen,  or  destroyed,  by  rioters,  and  provides 
(s.  2)  that  where  any  person,  having  sustained  such  loss,  has  re- 
ceived, by  way  of  insurance  or  otherwise,  any  sum  to  recoup  him 
in  whole  or  iii  part  for  such  loss,  the  compensation  payable  to  him 
shall,  if  exceeding  such  sum,  be  reduced  by  the  amount  thereof, 
and  in  an^'  other  case  shall  not  be  paid  to  him,  and  the  pa}'  er  of 
such  sum  shall  be  entitled  to  compensation  as  if  he  had  sustained 
the  loss. 

Actus  Dei. — Earthquakes,  hurricanes,  forest  fires,  and  fires  occa- 
sioned to  insured  property  by  or  during  the  existence  of  such  con- 
tingencies have  been  in  some  cases  excepted  from  the  risk  (s). 

Condition  as  to  change  of  title  of  property. — Policies  on  house  or 
goods  are  conditioned  to  cease  to  be  in  force  as  to  any  property 
thereby  insured  which  shall  pass  from  the  insured  to  any  person 
otherwise  than  by  will  or  operation  of  law  unless  notice  thereof  bd 
given  to  the  insurers  (";  and  the  subsistence  of  the  insurancd  in  fa- 
vour of  such  other  person  be  declared  by  a  memorandum  indorsed 
thereon  l>y  or  op  behalf  of  the  insurers. 

The  v.'l  condition  is  as  follows:  *' This  policy  ceases  to  be  in 
'  «5e  as  to  any  property  hereby  insured  which  shall  pass  from  the 
insured  to  any  other  person  otherwise  than  by  will  or  operation  of 
law,  unless  lotice  thereof  be  given  to  the  company,  and  the  sub- 
sistence of  the  insurance  in  favour  of  such  person  be 
♦doclored  by  a  memorandum  indorsed  hereon  by  or  on  [*  181] 
bfciialf  of  the  company."" 

Independently  of  the  condition,  insurances  against  fire  have 

{p)  Drinkwater  V.  London  Assurance,  2  Wils.  363.  Langdale  v.  Mason,  2 
Parle  Ins.  965  (8th  ed. ).  Mason  v.  Sainsoury,  3  Doug.  61.  Clarke  v.  Blytking^ 
2  B.  &  C.  254. 

(g)  Lycoming  Fire  v.  Schwenk,  40  Am.  Rep.  629,  95  Penn  St.  89. 
r)  49  &  50  Vict.  c.  8P 

(s)  Commercial  Unioii  •■■  Canada  Mining,  <tc.,  Co.,  18  Lr.  Can.  Jur.  80. 

(u)  Lynch  v.  DalzelLA  Bro.  P.  C.  431.  Sadlers  Co.  v.  Badcock,  2  Atk  554. 
As  to  French  law,  see  Forgie  v.  Royal  Insurance  Co.,  10  Lr.  Can.  Jur.  04. 

'*  AVhere  agent  knew  of  change  of  membership  of  firm  Held,  to  estop  in- 
surer from  claiming  that  policy  was  avoided.  German  Fire  Ins.  Co.  v.  Carrovo, 
21  111  App  681. 

I '  Conaition  against  sale  of  the  property  without  consent  of  company,  is  not 
vitiated  by  a  sale  from  one  assured  to  the  other,  they  being  co-partners.  New 
Orleans  Ins.  Aasn.  v.  Holberg,  64  Miss.  51. 

159        . 


.J  I 


*182 


THE  LAWS  OF  INSURANCE. 


M 


never  been  assignable  as  of  right  like  marine  policies  (u) .  But  the 
particular  mode  whereby  the  assent  to  hold  the  assign  insurv^d 
shall  be  testified  is  purely  matter  of  contract.  The  conaitiona  art 
framed  to  exclude  parol  consents  by  agents  of  the  insurer. 

Under  this  condition  the  policy  is  good  for  the  insurers  or  ad- 
ministrators of  the  insured,  and  also  for  a  trustee  in  bankruptcy 
(a;),  or  a  liquidator  on  the  winding  up  of  an  assured  joint-stock 
company,  or  it  would  seem  for  a  continuing  partner  under  an 
assignment  to  him  by  a  retiring  partner  (y). 

Where  ireehold  property  is  insured  the  policy  enures  to  the  real 
and  not  to  the  personal  representative  of  the  assured  (2). 

If  property  insured  were  sold  and  the  contract  was  complete, but 
the  property  not  actually  in  the  purchaser's  possession  although  at 
his  risk,  the  originf.1  assured  could  recover  nothing  on  the  policy 
and  the  purchaser  would  be  his  own  insurer.  If  the  propertjr  was 
not  paid  ibr,  the  question  of  vendor's  lien  might  arise,  but  if  the 
property  had  passed  from  the  vendor  it  is  submitted  that  this  con- 
dition would  preclude  him  from  recovering  (a). 
[*  182]  ^Bankruptcy. — When  an  assured  is  bankruj)t,  the  prop- 
erty la  the  policy  having  passed  from  him,  he  is  not  even 
a  party  to  an  action  on  the  policy,  and  consequently  discovery  can 
not  be  had  from  him  (6). 

Effect  of  execution. — If  property  were  seized  and  sold  under  an 
execution,  it  would  seem  that  a  policy  upoa  such  property  would 
not  cease  to  be  of  force  under  the  condition,  as  the  change  of  own- 
nership  would  be  due  to  the  operation  of  law,  the  judgment  and 
execution  (c). 

A  condition  is  sometimes  inserted  forfeiting  the  policy  for  seizure 
of  goods  under  an  execution  or  for  di;?i..  ite  as  to  title.  But  the 
condition  does  not  operate  until  there  has  been  a  change  of  pos- 
session, as  it  amounts  merely  to  a  stipulntion  that  tlie  policy  shall 
cease  to  be  binding  in  any  case  where  the  property  on  the  goods 
passes  by  legal  process  from  the  hands  of  the  assured  (rf). 

Seizure  in  ei^ccution, — Such  a  condition  is  not  wholly  unjust  and 
unreasonable,  for  it  is  always  an  important  matter  to  the  insurers 
that  the  goods  should  be  in  the  custody  and  ownership  of  the  in- 
sut  d.  whose  interest  alone  they  insure;  and,  if  they  are  taken 
from  nim,  the  damage  and  risk  to  the  insurers  are  as  great,  whether 

(«)  Worsley  v.  Wood,  8  T.  R.  710.  Oldman  v.  Bewicke,  2  H.  Bl  577  note. 
Jackson  v.  Fonstcr,  1  E,  &.  E.  46 ',  29  L  J.  Q.  B.  8,  83  L.  T.  290,  7  W  R.  578. 

{y)  Vide  cases  cit^d  in  note  to  Hathaway  v.  State  Insurance  Co.  52  Am.  Rep. 
438  ;  bill  bCc  contrd,  the  principal  taec. 

(2)  Payry  v.  Ashley,  8  Sim.  07.     Cidbertson  v.  Cox,  48  Am.  Rep.  204. 

(a)  Ray.ier  v.  Freston,  18  Ch.  D.  1,  50  L.  J.  Ch.  472,  44  L.  1.  N.  8.  787,  20 
W  R.  547.  Castellain  v.  Preston,  11  Q.  B  D.  89(!  52  L.  J.  Q  B.  360,  4!)  L.  T. 
N.  S.  29,  81  W.  R.  557.  New  South  Wales  Bank  v.  North  British  and  Mercan- 
tile Co.,  2  N.  S.  W.  Law  239,  8  N.  8.  W.  Law  r,0. 

(ft)  Manchester  Fire  Assurance  Co.  v.  Wykea,  23  W.  B.  884,  88  L.  T. 
N.  8.  142.  ' 

(c)  May  V.  .Standard  Firt  Co.,  8  U.  C.  (App.)  605. 

(d)  Ibid.  609. 

160 


CONDITIONS  IN   POLICIES. 


*184 


they  have  been  taken  rightfully  or  wrongfully.  But  it  is  unjust  to 
the  assured  that  the  policy  should  be  determinable  by  the  mere 
wanton  or  illegal  act  of  another,  which  the  insured  may  have  re- 
sisted as  far  as  possible,  and  which  he  could  not  prevent. 

But  a  mere  technical  levy,  which  does  not  increase  the  hazard  of 
the  insurers  when  the  insured  remains  in  full  enjoyment 
of,  and  has  the  same  power  and  the  *same  interest  to  pre-  [*  183] 
serve  the  property  as  before,  does  not  seem  within  the  con- 
dition (c). 

Condition  against  alienation  of  property.  Assignment  of  policy. — 
When  a  condition  is  inserted  in  the  policy  against  alienati  jn  of 
the  property,  and  the  policy  is  assigned  by  the  insured  ro  an 
assignee  not  interested  in  tlie  property,  such  assignee  does  not  by 
the  assignment,  and  the  assent  of  the  insurers  thereto,  become  the 
insured  under  the  policy,  and  the  policy  still  remains  liable  to  be 
defeated  by  a  breach  of  the  condition  by  the  assignor. 

In  no  case  can  an  assignment  of  a  fire  policy  be  validly  made 
without  the  insurers  assent  (/). 

Mere  notice  of  transfer  will  not  suffice.  Notice  cannot  compel 
assent  (g). 

Assignment  knoum  to  insurers.  Waiver  of  forfeiture. — But  if  the  in- 
surers discover  that  an  assignment  has  been  made  under  such  cir- 
cumstances as  to  render  the  policy  void,  and  on  notice  of  a  loss 
call  for  and  obtain  the  proofs  of  loss  on  the  footing  of  the  policy 
being  in  full  force,  they  will  no  longer  be  at  liberty  to  elect  to  treat 
the  policy  as  forfeited,  even  though  the  condition  be  that  the  policy 
shall  not  bind  until  the  assignment  is  approved  (g). 

Assignment  of  claim  on  a  policy  after  loss  is  not  a  breach  of 
this  condition  (A).  Where  a  to  al  loss  has  happened,  the  policy, 
and  all  claim  under  it,  can  be  efF  ctually  and  sately  assigned.  But 
in  cases  of  partial  loss,  to  assign  ihe  policy  would  avoid  it  as  to  the 
balance  of  the  insurance-money  not  payable  in  respect  of  the  par- 
ticular loss  which  already  occurred  (i). 

^Proceeds  of  policy  hypothecated. — When  a  policy  is  issued  [*  184] 
to  one  person,  the  loss  or  part  thereof  being  made  payable 
to  another  pereon  or  persons  as  their  interest  may  appear,  the  last 
words  are  in  reduction  of  the  amounts  specified  as  payable,  and 
those  persons  can  onlv  claim  up  to  the  limit  prescribed,  even  if 
more  is  due  to  them.    The  balance  goes  to  the  assured  (k). 


ri 


(e)  Same  case. 

{/)  Forgie  v.  Roj/al  Insurance  Co.,  10  Lr.  Can.  Jur.  84.  New  South  Wales 
Bank  v.  North  British  and  Mercantile  Co.,  3  N.  8.  W.  Law  (iO.  Kanady  v. 
The  Gore  District  Mutual  Hre  Co.,  44  Canada  (Q.  B.)  201. 

(g)  Canada  Landed  Credit  Co.  v.  Canada  Agricultural  Insurance  Co.,  71 
Grant  (U.  C.)  418,  423, 

{h)  Garden  v.  Ingram,  23  L.  J.  Ch.  478.     Waydell  v.  Provincial  Insurance 
Co.,  21  U.  C,  (Q.  B  )  012.    Anci  sco  Itandally  Li'thgow,  12  Q.  B.  D.  525. 
(t)  Kerr  v.  Hasting.^  Mutual,  41  U.  C.  (Q.  B.)  217. 
(*)  Dear  v.  Western  Assurance  Co.,  41  U.  C.  (Q.  B  )  558. 

11  POUTER  ON  INSUBANC£.  161 


'.sU 


\T  \F 


*185 


THE  LAWS  OP  INSUSANCE. 


Benefi  of  policy  not  secured  by  assignment  after  breach  of  condition. 
An  insured  cannot  of  course  by  assignment  after  condition  broken 
enable  a  trustee  to  recover  for  him  what  he  cannot  recover  for  him- 
self. If  the  assign  held  the  contract  freed  from  the  old  conditions, 
it  would  amount  to  a  different  and  less  onerous  contract  than  the 
one  assigned.  Assent  to  an  assignment  does  not  amount  to  a 
waiver  of  conditions  broken,  unless  such  breach  is  at  the  time 
known  (/).  Mortgagee  can't  recover  for  vwrtgagor  who  has  broken  cm- 
dt</(m.— Consent  with  notice  of  breach  is  waiver  of  that  l>reach, 
where  a  mortgage  is  effected,  and  if  necessary  assented  to  by  the 
company ;  though  the  mortgagee  may  bo  able  to  recover  his  mort- 
gage-money, he  cannot  recover  any  surplus  for  the  mortgagor  if 
the  latter  has  broken  a  condition  (w).  This  is  analogus  to  the  rule 
in  life  assurance  where  the  assured  mortgages  and  eubi^quently 
commits  suicide  («). 

Limitaticm,  of  time  to  me. — Insurers  may  lawfully  (o),  and  do  in- 
variably, limit  the  time  in  within  which  an  action  may  be  brought 
to  a  period  less  than  that  allowed  by  the  Statute  of  Limitation.  It 
is  obvious  that  to  have  Ltale  claims  made  upon  them  might  involve 
them  in  considerable  diflficulties  as  to  the  proofs  and  evi- 
[*  185]  dence  adduced  in  support  *thereof  which  would  not  arise 
if  prompt  action  were  insisted  on.*' 

Ground  thereof. — ^The  true  ground  on  which  the  clause  limiting 
the  time  of  claim  rests  and  is  maintainable  is  that,  by  the  contnct 
of  the  parties,  the  right  to  indemnity  in  case  of  loss  and  the  liabil- 
ity of  tne  company  therefor  do  not  become  absolute  unless  the  rem- 
edy is  sought  within  the  year.    The  stipulation  goes  to  the  right  as 

well  as  the  remedy The  clause  contempleites  a  loss  about 

which  a  contest  arises  or  may  arise  between  the  nasured  *and  the 
company,  and  in  respect  to  which  the  rit^ht  to  indemnity  may  be 
denied.  The  object  was  not  to  foreclose  it  and  prevent  a  resort  to 
the  proper  tribunal,  but  to  compel  a  speedy  resort  and  n  termina- 
tion of  the  controversy  while  the  facts  were  fresh  in  the  recollection 
of  the  parties,  and  witnesses  and  the  proofs  accessible  (p). 

(l)  Wing  V.  Harveif,  28  L.  J.  Ch.  511,  5  Do  G 
L.  T.  120,  2  W.  R.  870 

(m)  Oxford  Buildinff  Society  v.   Waterloo  Mutual 
U.  C.  (Q.  B  )  181. 

(n)  Solicitorff,  Jbc,  Co.  v.  Lamb,  2  De  fl.  J.  &  S.  2riO.  affirming  sumo  case  1 
H.  &  M.  710,  aa  L.  J.  Ch.  426,  10  L.  N.  T.  S.  702,  10  Jiir.  N.  8.  7.'J9,  V2  W.  11. 
941,  followed  in  City  Hank  v.  Soverdffn  C^.,  82  W.  R.  657. 

(o)  Grieves.  Northern  Axmranre  Co.,  6  Victoria  L.  H.  44:5.  Tho  Courts  of 
■omo  Atnericati  States  liavo  held  otherwiHc,  do  nisu  in  Lower  (>anada,  WHann  v. 
State  Fire,  7  Lr  Can.  Jiir.  223. 

(p)  Crayx.  Hartford  Fire,  1  Blatch.  (U.  vS.)  280.  Steen  v.  Niaijara  Fin 
Co.,  42  Am.  Rep.  297. 

'♦Wheroajreiit  of  company  induces  aHHitred  to  forlwar  brineing  Ruit  williin 
tho  time  limited  by  |X)liey,  the  company  waives  the  limitation,  livth  v.  Ifawkei/e 
Inn.  Co.,  GO  Iowa,  184. 

^  Also  where  compnnjr  ofToni  to  pay  Kot'cific  Bum,  less  than  that  claimed,  It  waivos 
right  to  require  nreliminarv  i»r(M)fH  of  loss  a»  ii  nre-requisito  to  right  to  sue  in  leus 
tban  six  days.  Commercial  Fire  Int.  Co.  v.  Alien,  80  Ala.  671. 

162 


M.  &  O.  266,  18  Jitr  894,  23 
Fire  Inxurance   Co ,  42 


CON  JITIONS  IN   POLICIES. 


*186 


Time  varies. — The  time  limited  by  the  condition  varies.  It  is 
reckoned  by  days  or  months  (i. « ,  calendar  months)  (g),  but  usually 
does  not  exceed  twelve  months  from  the  date  of  the  loss  or  refusal 
and  rejection  of  a  claim  made  under  the  policy.  To  make  the  con- 
dition effectual  against  the  assured,  it  must  be  pleaded  as  a  defence 
like  the  Statute  of  Limitations  itself  (r),  and  it  has  a  like  effect. 

Decree  for  payment  of  insurance-money  without  grant  of  policy. — If 
the  policy  ought  to  have  been,  but  has  not  been,  issued,  and  a  de- 
cree is  made  ibr  payment  by  the  insurer  on  the  footing  of  the  pol- 
icy having  been  actually  issued,  the  insurer  cannot  avail  himself  of 
the  condition  as  to  limitation  of  the  time  for  suing,  the  action  to 
compel  grant  of  a  policy  not  Iteirig  an  action  on  tho  policy  (s). 

Effect  of  limiting  condition. — Where  the  covenant  by  the  insurers  is 
to  pay  a  certain  lime  after  the  loss,  the  real  period  within 
which  *the  assured  could  sue  may,  by  the  limiting  condi-  [*  186] 
tion,  be  virtually  reduced  to  the  interval  between  the  day  at 
which  payment  ought  to  be  made  and  the  last  day  of  the  period 
within  which  action  must  by  the  condition  be  brought  (t),  since  the 
time  for  bringing  the  action  in  the  absence  of  special  terms  will  run 
from  the  happening  of  the  event  insured  against,  but  the  insured 
will  not  know  until  after  the  time  given  to  the  company  to  pay 
whether  they  intend  to  settle  the  claim  or  make  it  necessary  for 
him  to  sue  them.  And  where  proofs  of  loss  are  received  within  a 
reasonable  time,  before  the  expiration  of  the  period  fixed  by  tiie 
policy  for  suing,  the  company  cannot  cut  off  the  right  to  sue  by 
withholding  its  decision  upon  the- proofs  until  that  period  has  ex- 
pired, even  though  the  time  allowed  for  examinmg  the  proofs 
would  have  consumed  it  (w). 

The  il^sured  is  in  a  somewhat  oetter  position  where,  as  in  some 
policies,  his  time  runs  alternativ*  iy  from  the  loss  or  refusal  of  the 
comp  my  to  pay.  The  same  rule  holds  in  the  case  of  re-insurance, 
for  the  loss  or  damage  is  the  injury,  not  the  payment  of  the  loss, 
and  an  action  brought  within  twelve  months  of  payment,  but  more 
than  twelve  months  from  the  loss  against  a  re-insurer,  has  on  this 
ground  been  held  too  late  (x). 

Notice  of  loss  to  be  given  to  company. — Fire  policies  also  contain  a 
further  proviso,  running  as  follows: — "On  the  happening  of  any 
loss  or  damage  by  fire  to  any  of  the  property  hereby  insured,  the 
insured  is  forthwith  to  give  notice  in  writing  thereof  to  the  com- 
pany ("),  and  within  fiftee-.  days  at  latest  to  deliver  to  the  com- 


iq)  Pomares  V  Prnvinrinl  Ituviranve  Co.,  Steven's  Diffcst  (New  Bruns.)  237 
(1873).     Cornell  v.  Liveipo<fl  and  London,  14  Lr.  Cuti.  Jur.  250. 

(r)  Lnmbkin  v    Western  Assurance  Co,  13  U.  C  (Q  IJ.)  237. 

(s)  Vmletf  V.  Beacon  fnstirauce  Co.,  7  Grant  (U.  C  )  1!10 

(t)  Sec,  however,  Lambkin  v.  Western,  VI  U.  V.  (Q.  H  )  POl. 

(«)  Chambers  v.  Atlas  Insurance  Co  ,  50  Am  Ilcp.  1,  5i  Conn.  Rc".  17. 

(x)  Promncial  Co.  v.  Etna  Co,  10  U.  C  (Q  11.)  135 

'  *  Giving  notieo  of  loss  nn<l  rendertng  pnrtipulur  noeount  required  by  the  policy 
torcHidcntiicent  of  foreign  insuninec  company,  is  notice  to  the  company.    Nortti 


British  &  Mi  Inn.  Co  y,Crutch,fie.ld,  l()8ln(l.'278. 


163 


I  '1 

t  >;■ 


•■1 

t  r 


I       I, 


,    t 


i     »'i 


'       '    1     .     * 
1    M    H 


1'   I 


Lil^dfu^ii^^^ 


]i'  ' 


.. 


if  I: 


*188 


THE  LAWS  OF  INSURANCE. 


pany  a  claim  for  any  loss  or  damage,  containing  as  particular  ar, 
account  as  may  be  reasonably  practicable  of  the  several  articles  or 
matters  damaged  or  destroyed  by  fire,  with  the  estimated 
[*  187]  value  of  each  *  of  them  respectively,  having  regard  to  their 
several  values  at  the  time  of  the  fire,  and  in  support  thereof 
to  give  all  such  vouchers  (y),  proofs  and  explanations  as  may  be 
reasonably  required,  together  with,  if  required,  a  statutory  declara- 
tion of  the  truth  of  the  account;  and  in  default  thereof  no  claim  in 
respect  of  such  loss  or  damage  shall  be  payable  until  such  notice, 
accounts,  proofs  and  explanations  respectively  shall  have  been 
given  and  produced,  and  such  statutory  declaration,  if  required, 
shall  have  been  made." 

Preliminary  proofs,  tfcc— The  legality  of  this  condition  is  well 
established.  "  It  has  long  been  the  practice  of  companies  insuring 
against  fire,  for  the  purpose  of  their  own  security,  to  incorporate  in 
their  policies  by  reference  to  their  proposals  various  stipulations 
for  matters  to  be  done  by  the  assured  making  a  claim  before  the 
company  is  to  pay  him,  and  (as  the  remedy  by  action  for  not  com- 
plying with  this  stipulation  could  not  afford  them  any  protection) 
to  make  the  fulfilment  of  those  conditions  a  condition  precedent 
to  pay.  There  was  much  controversy  on  the  subject  about  a  cen- 
tury ago,  but  since  the  case  of  Worsley  v.  Wood  (2)  it  has  been  set- 
tled law  that  this  mode  of  protecting  themselves  is  effectual "  (a). 

Preliminary  proofs  are  required  for  the  benefit  solely  of  the  in- 
surer, in  order  that  he  may  ascertain  the  nature,  extent  and  char- 
acter of  the  loss,  and,  the  condition  in  the  policy  in  respect  thereof 
being  inserted  for  his  benefit,  there  is  no  reason  why  he  may  not 
waive  or  extend  the  time  in  which  the  proofs  are  to  be  furnished, 
nor  is   it  necessary   to   prove    an    express  agreement  to  waive 

(6),  ("). 
[*  188]      ^Condition  as  to  notice  of  loss. — The  insured  must  immedi- 

'  ately  upon  a  loss  give  notice  to  insurers  thereof  (").    In 

London  the  same  duty  devolves  by  statute  on  the  fire  brigade  when 
they  have  knowledge  of  a  fire.  But  the  condition  applies  irrespect- 
ive of  place  or  the  magnitude  of  the  fire  or  damage  aone,  and  many 
minor  fires  only  doing  slight  damage,  and  to  extinguish  which  the 


(y)  anq  Mars  v.  Eauitable,  15  U.  C  (Q.  B.)  143,  246. 

(2)  Womlei/  V.  Wood,  0  T.  11.  710.  See  also  Brown  v.  London  Assurance  40 
Hun.  (N.  Y.)  101. 

(a)  London  Guarantee  Co.  v.  Veartdey,  5  App.  Cas.  911,  015,  43  L.  T.  N.  8. 
800,  28  W.  II.  893. 

(6)  800  Edwards  v.  Travellers'  Ins.  Co.,  23  Blatch.  (U.  S.  Circ.  Ct )  228,  uh 
to  the  view  which  the  Courts  take  these  coiiuition.s  n.^  to  proofs,  notices,  &o. 

'"  An  agent,  havina  authority  to  ac^just  loss,  teils  assured,  after  an  examiiia* 
tion,  that  nothing  furtlicr  is  required,  there  is  a  waiver  of  further  preliminary 
proofs  of  loss,  although  clause  of  policy  states  that  agent  has  no  power  to  waive 
condition.    Indiana  Ins.  Co.  v.  Capehart,  lOH  Ind.  270. 

"  Provision  of  policy,  requiring  notice  of  a  loss,  may  bo  waived  by  an  agent 
who  has  authority  to  amust  losses,  even  though  policy  jirovides  that  it  shall  not 
bo  bound  by  the  acta  of  its  agents.    Stevens  v.  CUixens  Ins.  Co  ,  60  lowu  058. 

164 


CONDITIONS   IN   POLICIES. 


[189 


fire  engit  es  are  not  needed,  come  within  the  condition.    The  duty 
of  the  fire  brigade  does  not  affect  the  contract  between  the  parties. 

Time  for  giving  notice. — "Immediately"  or  "forthwith"  means 
within  a  reasonable  time  and  without  any  unjustifiable  delay  (a), 
and  reasonable  time  has  been  held  in  New*  York  to  be  a  matter  for 
the  Court  (6).  Due  diligence  will  be  required  in  the  notification 
even  when  the  insurance  is  on  interim  receipt.  Notices  given 
eleven  (c),  or  eighteen  (ri),  days  after  the  fire  have  been  held  too 
late,  but  one  given  five  days  after  the  fire,  one  of  such  days  being 
Sunday,  has  been  held  in  time  by  American  Courts  (e).  To  whom 
to  be  given. — But  notice  to  a  local  agent,  it  seems,  will  not  do,  unless 
lie  is  specially  named  as  the  proper  person  to  receive  it ;  and  if  the 
particular  number  of  days  is  named,  the  notice  must  be  given 
within  that  time  (/). 

Notice  of  loss.  Presumption  of  delivery. — Where  a  policy  requires 
notice  of  loss  to  be  given  forthwith  by  the  assured  to  the  assurer 
and  is  silent  as  to  the  mode  of  service,  the  insurer  will  be  presumed 
to  have  received  the  notice,  if  it  be  proved  to  have  been  properly 
addressed  and  por^ted,  since  the  post  is  the  natural  and  obvious 
mode  of  communication  in  matters  of  business,  especially  when 
assured  and  assurer  reside  in  different  places  (a).  And  in 
America  the  *presumption  has  been  held  to  be  based  on  [*  189] 
the  governmental  organization  and  conduct  of  the  public 
mail  service  rendered  efficient  through  sworn  officers,  and  on  com- 
mon experience  as  to  the  due  transmission  and  delivery  of  matter 
entrusted  to  the  post  (/).  The  same  rule  applies  to  proofs  (/).  It 
has  been  held  in  Canada  that  the  insurer  must  object  at  once  to 
defects  or  lateness  of  notice  (g),  but  in  some  American  States  a  dif- 
ferent view  obtains  {h).  If,  however,  the  silence  of  the  insurer 
misleads  the  assured  and  prejudices  his  claim,  the  insurer  will  in 
such  case  bo  held  to  have  waived  his  right  to  notice  or  proof,  or 
will  be  estopped  from  disputing  that  they  were  delivered  in  due 
time. 

Preliminary  notice.  Agenfs  adjustment. — Unless  the  insurer  can 
show  fraud,  he  will  be  precluded  by  his  agent's  adjustment  of  a 
loss  from  denying  that  ho  had  proper  notice  thereof  (i).    But  if 

(a)  liokcn  V.  Amazon  Tnxurauce  Co.,  51  Maryland  612.  Cashati  v.  North- 
western National  Insurance  Co.,  5  Bisaell  (C.  (/t.  U.  S  )  47G. 

(b)  Brown  v.  London  As.<iuranrc,  40  Hun.  (N.  Y.)  101. 

(c)  Goodwin  V.  Lancanhire  Fire,  18  Lr.  Can.  Jur.  1. 

(d)  Trask  v.  Insurance  Co.,  29  Penn.  198.  Edwards  v.  fnnurance  Co.,  76 
Penn.  .178. 

(e)  Griffej/v.  New  Vork  Central  Co.,  CS  Am.  Rop  202,  55  Sickell  (N.Y.)417. 
(/)  Patlon  V.  Employers'  IJahilitf/  Co  ,  20  L.  U.  Ir.  93. 

ig)  Susquehanna  Insurance  Co,  v.  Toy  Co.,  97  Ponn.  424,  $19  Am.  Ilcp.  816. 

(/)  Sco  Jiell  V.  Lyrominff  Co ,  10  Hun.  (2«  N.  Y.  Sup.  Ct  )  5!«8. 

(fl)  Wiggins  v.  Queen  Insurance  Co  ,  V\  Lr  Can.  Jur.  141 

(ft)  lirown  V  London  Assurance,  40  Hun.  (  N.  Y. )  107.  Cornell  v.  Phamix 
Co ,  (17  Tnwa  HSS. 

(/)  Ifome  Tn,mrance  Co.  v.  Mi/er,  9.1  Illinoifl  271  ;  but.  boo  M'Kean  v.  Commer- 
aid  Union,  6  P.  &  P  (Now  Briins.)  588. 

1(56 


' '  \  ii-<> 


, , .. 


*190 


THE  LAWS  OP  INSUBANCe;. 


|JJ4    i  '.I 


W'<- 


)■    i).;  ''1 


[: 


'l 


lii: 


the  insurer's  agent  by  fraud  obtains  a  settlement,  the  assured  can 
get  it  set  aside  (j). 

Limitation  operates  though  assured  in  prison  at  time  of  fire. — The 
contractual  limitation  will  not  be  extended  on  the  ground  that  the 
assured  was  in  prison  at  the  time  of  the  loss,  and  so  continued 
until  his  death,  and  that  his  creditors  began  the  action  within  a 
reiasonable  tiqae  thereafter  (k). 

Proof. — Of  the  elaborateness  of  some  conditions  na  to  proofs,  no 
better  example  can  be  given  than  that  in  the  Canadian  oase  of 
Smith  V.  Commercial  Union  (I),  characterized  in  the  judgment  as  of 
wonderful  structure  and  scope,  and  as  calculated  to  give  the  assured 
twelve  months'  hard  work — three  months  being  the  limit  allowed 

him  to  make  out  his  proofs  (m),  ("),  ("). 
[*  190]  ^Particulars  of  loss.  When  to  be  delivered. — The  account  of 
loss  is  usually  conditioned  to  be  delivered  within  fifteen 
days  at  latest,  and  such  condition  is  reasonable  in  substance. 
Otherwise  the  assured  might  lie  by  and  spring  a  stale  claim  on  the 
insurers  at  a  time  when  they  could  not  investigate  it.  Sometimes 
three  months  are  given  for  the  account  (n).  Construction  of  condi- 
titm. — The  condition  will  not  be  strictl}^  construed  (o).  It  means 
that  the  assured  is  within  a  convenient  time  after  the  loss  to  pro- 
duce to  insurers  something  which  enable  them  to  judge  whether 
be  has  sustained  a  loss  or  no,  and,  if  from  any  cause  it  is  impossi- 
ble to  give  the  preliminary  proof  within  the  time,  it  would  seem 
(and  it  certainly  is  just)  that  reasonable  time  should  be  allowed 
(p).  The  assured,  of  course,  cannot  be  expected  to  give  notice 
till  he  knows  himself,  and  if  he  is  away  at  the  time  of  fire  no  objec- 
tion can  be  taken  on  the  ground  of  any  delay  caused  by  such 
absence  (q). 

Delay  in  notice  suspends  claim. — And  the  condition  is  here  usually 
BO  drawn  as  not  to  forfeit  the  insurance  for  delay  beyond  the  fifteen 
days,  but  only  to  suspend  all  claim  under  the  policy  "  until  the  re- 
quired notices,  accounts,  proofs,  and  explanations  are  given  in." 


\ii 


I )  McLean  v.  Equitable,  SO  Am.  Ren.  779. 

[)  Tallman  v.  Mutual  Fire  Co.,  27  U.  C  (Q.  B.)  100. 

(/)  33  U.  C.  (Q.  B  )  09,  89. 

(»i)  See  also  in  Bowes  v.  National,  4  P.  '&  B.  (New  Brans  )  437. 

(n)  lioper  v.  Letidon,  1  E.  &  E  825,  5  Jur.  N.  8  491,  28  L.  J.  Q.  B.  2G0,  7 
W.  R.  441. 

(o)  Mason  v.  Harvey,  8  Ex.  810,  22  L.  J.  Ex.  336,  21  L.  T.  158.  Dill  v. 
Quebec  Assurance  Co,  1  Revuo  legale  (Lr.  Can  )  118,  Lr.  Can.  Civil  Code,  2478. 
•  (»)  l^cott  V.  Phoenix,  Stiiurt  (  Lr.  Can. )  354  (  P,  C).  See  Bowes  \.  National, 
4  P.  &  B.  (  New  Bruns. )  437.  Dill  v.  Quebec  Assurance  Co ,  above  cited,  1 
Re^ue  It'i^le  (Lr.  Can.)  118,  Lr.  Can.  Code,  2490-2509. 

(q)  Smith  v.  Queen  Insurance  Co.,  1  Han.  (New  Brims.)  811. 

*  •  Provision  in  a  policjr  that  in  case  of  loss  copies  of  all  policies  must  bo  fur- 
nished requires  a  substantial  and  reasonalile,  and  not  a  literal  compliance.  Mil- 
ler V.  Hartford  Fire  Ins.  Co.,  70  Iowa  704 

'"  If  proofs  of  loss  are  reasonably  certain  it  is  enough.  The  precision  in 
pleading  is  not  necessary.  Erwin  v.  Springjield  F.  d:  M.  Ins.  Co.,  24  Mo. 
App.  146. 

166 


CONDITIONS   IN   POLICIES. 


*192 


If  these  words  are  in  the  policy  the  condition  is  still  precedent  (r), 
but  these  words  enlarge  tlie  time  beyond  the  fifteen  days.  State- 
merit  of  loss. — Consequently  till  the  statement  is  made  and  the  stat- 
utory declaration,  if  required,  made  also,  the  money  is  under  the 
condition  not  payable,  and  the  time  of  payment  not  come. 
So  that  though  the  right  of  action  *may  not  be  lost,  it  will  be  [*  191] 
suspended  till  the  condition  is  complied  with  («). 

Meaning  of  ^^fuUpartictdars." — '  Full  particulars  "  means*' the  best 
particulars  which  the  assured  can  reasonably  give,"  and  the  latter 
phrase  is  in  some  policies  substituted  for  the  former.  If  the  pro- 
viso were  more  strictly  construed,  inadvertent  omissions  of  losses  or 
insertions  of  things  not  lost  would  defeat  the  claim  of  the  assured  (t). 

Condition  as  to  verification  of  loss.  False  statement  as  to  title  not  within 
it. — When  a  condition  only  requires  verification  of  the  statement  of 
loss,  false  statements  as  to  title  and  incumbrances  cannot  be  relied 
on  as  avoiding  the  policy  under  this  condition  (u). 

Certificate  of  magistrate. — The  conditions  still  found  in  American 
and  colonial  policies  (x)  requiring  the  certificate  of  a  magistrate 
seem  to  have  long  since  fallen  out  of  use  in  this  country  (^),  and 
only  come  before  English  lawyers  in  colonial  appeals.  Where  they 
are  used,  no  claim  for  indemnity  can  be  made  until  a  proper  cer- 
tificate has  been  furnished  (z). 

Old  form  of  condition. — The  purpose  of  the  old  condition  as  to  the 
certificate  of  magistrate,  clergyman,  churchwardens,  and  other  rep- 
utable inhabitants  was  that  persons  holding  public  positions  in  the 
neighbourhood,  and  who  were  therefore  to  be  deemed  responsible 
and  substantial,  might  give  the  ofiice  their  opinion  on  the  charac- 
ter of  the  fire  and  loss,  and  thereby  afiiord  the  office  some  protection 
from  fraud  (a). 

^'•Refusal  of  certificate. — Refusal  of  such  certificate  will  not  [*  192] 
affect  the  insurers.    The  assured  cannot  compel  the  grant 
of  Euch  certificate  (6),  he  cannot  substitute  other  persons  for  those 
stipulated  (c),  and,  having  undertaken  for  the  act  of  a  stranger  can 
not  succeed  unless  that  act  is  done  (d).     But  there  may  be  cases  in 


>  H 


u>r 


■Aim 


w  n  t-; 


■;!,?,!! 


(r)  Weir  v.  Northern,  4  L.  R.  Ir.  689.  Ijofargey.  Liverpool,  London  and 
Globe,  17  Lr.  Can.  Jur.  287. 

(s)  Oldman  v.  Beicicke,  1  H.  Bl.  677  note  (1780).  Worslei/  v.  Wood,  0  T.  R. 
710  (1790).     Mason  v.  Harvey,  8  Ex.  819,  22  L.  J.  836,  21  L  T.  158. 

It)  Ma^on  V.  Harvey,  8  Ex.  819,  820,  22  L.  J.  Ex.  8a0,  21  L.  T.  158. 

lu)  Ross  V.  Commercial  Union,  26  U.  C  (Q.  B.)C52. 

far)  Supra.  And  deo  Logan  v.  Commercial  Union,  0  R.  &  G.  (Nov.  Sco)  809. 

(tf)  This  disposea  of  cases  like  lioutled,ge  v.  Burrell,  1  H.  Bl.  255,  and  Otdman 
V.  Bewicke,  3  H.  Bl.  577  note. 

(2)  Worsley  v.  Wood,  6  T.  R.  7i0.  M^Ilosie  v.  Provincial  Insurance  Co.,  84 
U.  C.  (Q.  B.j  55.  Kerr  v.  Britlth  American  Assurance  Co  ,  83  U.  C.  (Q.  B.) 
569.    Daniels  v.  Equitable  Co,,  CO  Conn.  561. 

(a)  Worshy  v.  Wood,  6  T.  R.  710,  per  Lawrence,  J. 

ib)  Worsley  v.  Wood,  0  T.  R.  722,  per  Lawrence,  J. 
c)  P.  721,  per  Grose,  J.     Campbell  v.  French,  0  T.  R.  200. 
d)  P.  720,  per  Grose,  J.     Racine  v   Equitable,  6  Lr.  Can.  Jur.  89. 

1(57 


193 


THE  LAWS  OP  INSURANCE. 


'mi 


i  I 


which  the  Courts  will  hold  the  condition  substantially  complied 
with,  provided,  of  course,  that  the  right  persons  certify. 
Contents  of  certificate.— The  certificate  must  state— 

(1)  That  the  magistrate  is  not  interested. 

(2)  That  ho  has  examined  the  circumstances  attending  the  fire, 

&c. 

(3)  That  he  knows  the  character  of  the  assured. 

(4)  That  he  believes  the  fire  to  have  happened  without  fraud  or 
evil  practice  on  the  part  of  the  assured. 

(5)  That  the  claimant  under  the  policy,  if  difierent  from  the  as- 
sured, has  sustained  damage  in  (e)  respect  of  matters  covered  by 
the  policy. 

(6)  The  amount  of  loss  which  is  believed  to  have  taken  place  (/). 
Person  certifying  must  be  disinterested. — The  magistrate  must  not 

have  suffered  by  the  fire,  nor  have  any  interest  in  the  property 
damaged,  nor  be  interested  in  the  insurance  company  (gr),  nor  be 
a  creditor  or  relation  of  the  assured  (A). 

A  coroner  has  in  Canada  been  held  to  be  a  magistrate  within 
the  condition  (i). 
[*  193]  *  Affidavit  of  loss. — In  the  older  policies  an  affidavit  used 
to  be  required.  But  now  the  policy  merely  binds  the  as- 
sured to  make  a  statutory  declaration  if  required,  vouching  the 
truth  of  his  statements  as  to  loss,  value,  &o.  The  affidavit  must  be 
in  proper  form  (j)  or  as  stipulated  (k).  This  must  be  bond  fide  de- 
manded for  any  defence  to  be  rested  on  its  not  being  supplied  {I). 

Preliminary  proofs. — Such  stipulations  as  to  proof  do  not  touch 
the  substance  of  the  contract,  but  relate  only  to  the  form  or  mode 
of  ascertaining  and  proving  the  liability  of  the  insurer ;  and  the 
proofs  may  be  submitted  to  the  officers  of  the  insurance  company, 
who  must  give  an  opinion  on  their  sufficiency  in  the  ordinary 
scope  of  their  employment  (m),  (*•). 

Omission  to  make  the  formal  preliminary  proof  of  loss  required 
by  a  policy  may  be  waived  by  the  officers  of  an  insurance  company. 
Such  waiver  may  be  express  or  implied,  and  will  be  implied  from 

(c)  Kerr  v.  British  American  Assurame  Co.,  82  U.  C.  (Q.  B.)  509. 

(/)  Scott  V.  Phoenix  Co.,  Stuart  (Lr.  Can.)  152,  854  (P.  C). 

[g)  M'liosie  v.  Provincial  Insurance  Co.,  34  U.  C  (Q.  B  )  55,  where  the  mag- 
istrate was  landlord. 

(A)  Daniels  V.  Equitable  Co.,  50  Conn.  551. 

(t)  Kerr  v.  British  American  Co.,  ^2  U.  C.  (Q.  B.)  5G9. 

(j)  Shaw  V.  St.  Lawrence  County  Mutual  Fire  Insurance  Co.,  11  U.  C. 
(Q.  B.)  78. 

(k)  Langel  v.  Mutual  Insurance  Co.,  17  U.  C.  (Q.  B.)  524.  Mann  v.  Western, 
17  U.  C.  (Q.  B.)  190. 

(I)  Cameron  v.  IHmes  and  Beacon,  7  U.  C.  (C.  P.)  234. 

(m)  Priest  V.  Citizens^  Mutual,  85  Masa.  (3  Allen)  003. 

*"  It  ia  the  duty  of  insurance  company,  upon  finditig  proofs  of  loss  objectiona> 
ble,  to  return  the  same  informing  assured  of  the  particular  defects.  A  general 
reply  that  they  do  not  correspond  with  printed  instructions,  and  refu.sal  to  receive 
them,  will  not  avail  the  company.  Universal  Fire  Ins.  Co.  v.  Black,  109  Pa. 
St.  585.. 

168 


CONDITIONS  IN  POLICIES. 


*194 


omission  to  state  their  "objection  to  the  preliminary  proofs  and  re- 
fusing to  pay  on  other  grounds  (n). 

Proofs  iMist  he  sent  in  wiJlhin  prescribed  time. — Where  a  condition  of 
a  fire  policy  requires  the  makin>{  and  furnishing  of  proofs  of  loss 
within  a  specified  time,  and  declares  that  until  ihey  are  furnished 
the  loss  shall  not  be  payable,  the  time  is  a  material  part  of  the  con- 
dition, and  consequently,  in  the  absence  of  waiver,  the  assured 
cannot  recover  unless  he  sends  in  the  proper  proofs  within  the  pre- 
scribed time  (o),  ("). 

*  Waiver  of  condition  as  to  proofs. — Mere  silence  as  to  proofs  [*  194] 
sent  in  after  the  time  limited  by  the  conditions  does  not 
amount  to  a  waiver  of  the  condition,  nor  does  a  declaration  then 
made  that  the  company  does  not  consider  itself  liable  amount  to  a 
waiver  (jj). 

Proof  may  be  given  of  loss  besides  that  in  account  delivered  to  company. 
Where  a  detailed  account  of  loss  sustained  by  the  fire  is  delivered 
in  compliance  with  a  stipulation  in  the  policy,  the  plaintiff  is  not 
precluded  from  giving  evidence  of  the  loss  of  property  not  specified 
m  the  account  (g),  (,"). 

Time  for  payment  runs  from  completion  of  proofs. — The  time  allow- 
ed by  the  condition  for  payment  of  the  insurance-money  by  the 
company  runs  from  the  time  the  insured  puts  in  the  proofs  on 
which  he  relies  (r). 

Waiver. — Waiver  may  be  inferred  from  the  acts  and  conduct  of 
the  insurer  inconsistent  with  any  intention  to  insist  on  the  strict 
performance  of  the  condition  (s),  (**). 

Where  proofs  unnecessary. — Where  an  insurance  company  repudi- 

(n)  Pimv.  lidd,  G  M.  &  G.  1,  12  L.  J.  C.  P.  299,  6  Scott  N.  R.  983,  Under- 
hill  V.  Agawam  Insurance  Co.,  GO  Mass.  (G  Cush.)  440.  Pii&st  v.  Citizens^ 
Mutual  Fire,  85  Mass.  (3  Allen)  002.  Lambkin  v.  Ontario  Marine  and  Fire, 
12  U.  C.  (Q  B.)  578.  Whyte  v.  Western  Insurance  Co.,  22  Lr.  Can.  Jur.  215 
(P.  C).  Knickerbocker,  &C;  Co.  v.  Pendleton,  6  Davis  (Sup.  Ct.  U.  S.)  G96, 
709.    Gauche  v.  London  and  Lancashire  Co  ,  4  Woods  (U.  S.  Circ-  Ct.)  102. 

(«)  Whyte  V.  Western  Co.,  22  Lr.  Can.  Jur.  215  (P.  C). 

(p)  Whyte  V.  Western  Co.  (in  Privy  Council,  reported  22  Lr.  Can  Jur.  215. 
Abrahams  v.  Agrimdtural  Mutual  Fire  Co.,  40  If.  C  (  Q.  B  )  175,  180.  See 
Lancashire  Co.  v.  Chapman,  (P.  C,  reported  in  7  Revue  legale  (Lr.  Can.)  47. 

(q)  Vautc.  V.  Forster,  lr.  Circ.  Rep.  47. 

(r)  See  Rice  v.  Provincial,  7  U.  C  (C.  P.)  548.  Hatton  v.  Provincial,  7  U. 
C.  (C.  P.)  556.     Cameron  v.  Monarch,  7  U.  C.  (C.  P.)  212. 

(s)  Pokes  V.  Amazon  Insurance  Co  ,  51  Maryland  512,  and  cases  there  cited. 

*'  Where  no  lime  is  required  in  which  to  furnish  proofs  of  los.s.  they  may  be 
furnished  within  a  reasonable  time,  according  to  circumstances.  Miller  v.  Hart- 
ford  Fire  Ins.  Co.,  70  Iowa  704. 

^ "  If  company  refused  to  act  upon  proofs  of  loss  and  repudiated  liability,  in- 
sured is  not  estopped,  hy  the  proofs,  from  recovering  a  larger  amount.  Sibley  v. 
Prescott  Ins.  Co.,  57  Mich.  14. 

^'  Where  insurance  company  received  praofs  of  loss  without  making  objection. 
Held,  that  insurer  waived  defects.  Fliot  Five  Cents  Saving  Hank  v.  Commer- 
cial Union  Assurance  Co.,  142  Mass.  142.  Susquehanna  Muf  "^ire.  Ins  Co.  v. 
Cusick^  109  Pa.  St.  157.  Parks  v.  Pha>nix  Ins.  Co.,  26  Mo.  .'  ^jp  537.  Erwin 
V.  Springfield  F.  &  M.  Ins.  Co.,  24  Mo.  Apt).  145. 

169. 


:UfK 


*195 


THE  LAWS  OF  INSURANCE. 


m 


ates  an  insurance  and  has  not  signed  a  policy,  preliminary  proofs 
are  needless  (<),  ('*),  (")•  ,  ,  .       . 

Edimate  of  amount. — The  assured  may  have  to  give  in  a  valua- 
tion of  what  he  has  l»st  under  the  condition  as  to  particulars. 
Whether  so  stipulated  or  not,  he  cannot  recover  for  more  than  the 
worth  at  the  time  of  the  fire,  and  it  is  usually  stipulated  that  he 
shall  so  value  (u). 

Price. — In  the  case  of  furniture  cost  price  might  assist  in 
[  *195]  arriving  at,  but  would  not  be,  the  proper  estimate.  *In  the 
case  of  stock-in-trade,  the  market  price  (v),  and  not  the  cost 
price  or  intrinsic  value  would  seem  to  be  the  proper  value.  But 
the  cost  of  manufacturing  goods  may  be  given  in  evidence  to  aid 
the  jury  in  determining  the  fair  market-value  (w).  Naturally  goods 
long  in  stock  would  not  be  estimated  at  cost  but  at  sale  price,  and 
it  would  only  seem  fair  to  take  the  same  test  for  goods  recently  ac- 
quired and  in  full  condition  and  favour  with  the  public.  The  rule 
cuts  both  ways  when  prices  are  depressed  (a;). 

Mistake  in  proofs  as  to  cause  of  fire. — Error  as  to  the  cause  of  fire 
(made  without  fraud)  in  the  preliminary  proofs  may  be  corrected 
and  the  insurer  made  liable  by  proof  of  the  true  cause  (y).  Inno- 
cent misstatement  is  not  within  the  condition  (z). 

Acceptance  of. — If  the  insurers  admit  a  policy  and  agree  to  try  the 
cause  and  manner  of  the  loss,  they  cannot  take  any  objection  on 
the  policy  as  to  the  propriety  of  the  notices  and  proof  (a). 

Estimate  must  be  detailed. — The  damage  must  not  be  lumped,  but 
given  in  detail.  Even  if  not  so  stipulated,  the  assured  would  be 
liable  to  deliver  particulars  giving  a  detailed  account  of  the  several 
items  making  the  sum  total  of  his  loss. 

A  fraudulent  overcharge  will  of  course  avoid  the  policy.  The 
condition  relating  thereto  is  no  mere  threat  (6). 

Vouchers. — Vouchers,  proofs,  and  explanations  are  required  as 
much  by  good  faith  as  by  the  conditions,  and  a  man  who  would 


(<)  Goodwin  v.  Lancashire  Fire,  18  Lr.  Can.  Jur  1. 

(m)  As  to  evidence  admissible  in  proof  of  value,  see  Clement  v.  British  Atner- 
ican  Ins.  Co.,  141  Mass.  298. 

(u)  Equitable  Co.  v   Quinn,  11  Lr.  Can.  Rep.  170. 

(w)  Clement  v.  British  American  Co.,  141  Mass.  at  p.  301.    Mack  v.  Lan- 
cashire Co.,  2  McCrary  (U.  S.  Circ.  Ct.)  211 
(x)  M'Cuaig  v.  Quaker  City  Co.,  18  U.  C.  (Q  B.)  130. 

{y)  Smiley  v.  Citizens'  Fire  14  West  Virginia  33.  Meagher  v.  London  and 
Lancashire  Fire,  7  Victoria  L.  R.  39^ 

(«)  Titus  V.  Glen  Falls  Co.,  81  N.  Y.  412,  421. 

(a)   Walker  v.  Western,  18  U.  C  (Q.  B.)  19. 

(6)  Thomas  v.  Times  and  Beacon,  3  Lr  Can.  Jur.  1G2. 

**  Proof  of  loss  or  objection  to  form  df  proof  is  waived  when  company  basis 
its  refusal  to  pay  on  other  grounds  Grange  Mill  Co.  v.  Western  Assurance  Co., 
118  111.  896.     Continental  Life  Lis.  Co.  v.  Roger.i,  119  111.  474 

"  An  unqualified  refusal  to  pay  loss  is  a  waiver  of  proof  of  loss  even  though 
statute  and  contract  require  such  proof  Boyd  v.  Cedar  Rapids  Ins.  Co.,  70 
Iowa  325. 

170  .  . 


C»NDrnONS   IN   POLICIES. 


*197 


not  show  his  accounts  would  have  as  little  chance  of  recovering 
under  tlie  Common  Law  as  under  an  ordinary  policy. 

♦Where  the  assured  refused  to  produce  invoices  demanded  [*  196] 
by  the  insurers  under  a  condition  as  to  vouchers,  &c.,  it  was 
held  that  he  must  be  nonsuited  (c).  Vouchers  of  course  will  in- 
clude books  of  account  if  any  are  kept.  And  where  the  assured 
has  insured  a  certain  sum  on  stock-in-trade  and  has  been  trading 
for  some  months,  the  insurers  are  reasonably  justified  within  this 
condition  in  calling  for  such  proof  as  the  assured  can  furnish,  that 
after  deducting  the  goods  saved  and  the  goods  sold  he  still  had  in 
stock  such  further  aqnount  of  goods  as  would  make  his  loss  amount 
to  the  full  sum  insured  (d)  or  claimed  under  the  policy. 

IVoof  of  loss.  What  may  be  required. — A  builder's  certificate  as  to 
the  value  of  the  house  at  the  time  of  fire  may  reasonably  be  re- 
quired under  this  condition,  and  must  be  supplied,  if  required,  be- 
fore action  brought  (e). 

Omission  to  verify  if  so  required  by  books  of  account  or  other 
proper  vouchers  is  fatal  unless  the  conditions  are  literally  or  sub- 
stantially complied  with  (/)  in  those  cases  where  the  man  has  such 
means  of  verification. 

If  the  books,  &c.,  are  burnt,  the  assured  must  supply  a  particu- 
lar account,  if  any  means  of  so  doing  still  remain  (g). 

A  mere  affidavit  of  value  with  accounts  of  goods  sold  to  the  as- 
sured, and  having  only  charges  of  goods  per  invoice  without  par- 
ticulars, will  not  suffice  (h). 

*Fal8e  statement.  AgenCs  knowledge  of  facts. — A  false  state-  [*  197] 
ment  made  by  the  insured  cannot  be  excused  by  knowledge 
of  the  truth  possessed  by  a  local  agent  receiving  the  application, 
whether  such  false  statement  be  made  in  the  application  or  the 
proofs  of  loss.  In  the  latter  case,  the  liability  havmg  accrued,  the 
question  of  waiver  would  not  arise  (t). 

Ascertainment,  &c.,  loss.  Condition  precedent. — Ascertainment  and 
proof  or  adjustment  of  the  loss  may  be  made  a  condition  precedent 
to  the  right  to  sue  for  the  loss,  audit  is  a  good  defence  to  an  action 
that  the  loss  has  not  been  ascertained  and  proved  (k).  The  mode 
of  proof,  tfec,  need  not  be  pleaded,  being  matter  of  evidence  only. 

^'■Satisfactory.''' — Proof  satisfactory  to  the  company  means  proof 

fc)  Cinq  Mars  v.  Equitable  Insurance  Co.,  16  U.  C  (Q.  B.)  143,  246. 

(rf)  JWa.,  246,  per  Robinson,  C.  J. 

(e)  Fawcett  v.  Liverpool,  London,  and  Globe,  27  U.  C  (Q.  B)  225. 

(/)  Greaves  v.  Niagara  District  Mutual  Fire  Insurance  Co.,  25  U.  C  (Q.  B.) 
127.  Scott  V.  Niagara  Distnct,  25  U.  C  (Q  B.)  123.  Banting  v.  Niagara 
Distnct  Mutual  Fire  Insurance  Co.,  25  U.  C.  (Q.  B)  431. 

(g)  Carters  V.  Same,  19  U.  C.  (C.  P-)  143 

(h)  Mulvey  v.  Gore  District  Mutual  Fire  Insurance  Co ,  2.")  U.  C.  (Q.  B. )  424. 

(i)  Hansen  v.  American  Insurance  Co.,  57  Iowa  741 

[k)  Elliot  V.  Rotfal  Exchange,  L.  R.  2  Ex.  237,  86  L.  J.  Ex.  129.  16  L  T.  N. 
S.  899.  16  W  R.  907.  See  also  M'Manus  v.  Etna  Co.,  6  Allen  (New  Bruns) 
814.  Johnston  \.  Western,  4  U  C.  (App.)  281.  Lambkin  v.  Western,  13  U.  C. 
(Q  B  )  237.  Waifdell  v.  Provincial,  21  U.  C.  (Q.  B.)  012.  London  and  Lan- 
cashire V.  Honey f  2  Victoria  L.  B.  7. 

171 


'■:'i^'^;3'tl 


♦199 


THE  LAWS  OF   INSURANCE. 


1  i  m'^^ 


A-m 


'I  i; 


■|;t 


I  '■■' 


which  ought  to  be  or  in  the  opinion  of  a  court  of  justice  is  satis- 
factory (/). 

Valuation.  Fraud.  Excesaive  valuation. — If  the  assured  does  not  rea- 
sonably and  actually  believe  in  the  valuation  put  on  his  goods  in  his 
proof,  he  will  forfeit  all  claim  under  the  condition  as  to  fraud  (m). 
And  if  a  jury  find  a  verdict  for  an  amount  very  much  less  than  the 
claim,  the  judgment  will  either  be  entered  for  the  insurers  (n)  on 
the  ground  that  the  assured  has  been  guilty  of  fraud  in  his  valua- 
tion, and  so  avoided  the  policy  within  the  condition,  or  a  new  trial 
will  be  ordered  (o).  It  does  not  seem  clear  how  much  less  the  find- 
ing must  be  than  the  valuation  for  the  policy  to  be  avoided  on  the 
ground  of  fraud,  and  no  decision  seems  to  have  been  given 
[*  198]  on  that  *point  in  England  encept  Levy  v.  Baillie,  where  the 
claim  was  £1085  and  the  verdict  for  £500  (p).  In  Novia 
Scotia,  in  a  case  where  the  verdict  was  for  83000  but  many  witnesses 
valued  the  property  at  $500,  the  verdict  was  set  aside  (g).  But  in 
another,  where  6840  was  claimed  and  $600  awarded,  the  verdict  was 
upheld  because  the  effect  of  the  finding  of  the  jury  was  to  negative 
fraud  (r).  Over-value. — So  also  in  Ontario,  where  it  was  said  that 
it  not  appearing  that  an  over-valuation  was  made  mala  fide,  but  by 
error  ofjudgment,  the  CJourt  will  not  set  aside  a  verdict,  the  ques- 
tion of  fraud  being  for  the  lury  («). 

Over-v(duali(mnotjraudulemt. — Over- valuation  in  an  application, 
if  not  fraudulent,  will  not  avoid  a  policy  (0- 

Conditim  as  to  fraud  in  claim,  or  criminal  procurement  of  fire. — The 
condition  as  to  fraud  in  the  claim  runs  as  follows : — "  If  the  claim 
be  in  any  respect  fraudulent,  or  if  any  statement  or  statutory  dec- 
laration made  in  support  thereof  be  false,  or  if  the  fire  was  caused 
by  or  through  the  wilful  act,  procurement,  or  connivance  of  the  in- 
sured or  any  claimant,  all  benefit  under  this  policy  is  forfeited." 

This  condition  imposes  no  duty  as  to  diligence  in  saving  the 
goods  endangered  by  a  fire,  but  deals  only  with  arson  or  procure- 
ment thereof.  In  London  the  rescue  of  property  is  generally  un- 
dertaken by  the  salvage  corps,  and  the  goods  are  at  insurer's  risk 
from  the  outbreak  ot  the  fire.  In  America  and  the  colonies 
[*  199]  efforts  are  made  by  many  if  not  all  insurers  to  make  *the 

(?)  London  Guarantee  Co.  v.  Fearnley,  5  App.  Cas.  911,  43  L.  T.  N.  S.  390, 
28  W.  R  893.  Manby  v.  Greshnm  Life,  29  Beav.  439,  •  1  L.  J.  Ch.  94,  4  L.  T. 
N.  S.  347,  9  W.  R.  547,  7  Jur.  N.  S.  388 

(m)  Newton  v.  Gore  District  Mutual  Fire  Insurance  Co.,  33  U.  C.  (Q.  B.)  92. 

(n)  Riach  v.  Niagara  Co.,  21  U.  C.  {C.  P.)  464. 

(o)  Levy  v.  Baillie,  7  Bing.  369. 

( p )  See  also  Britton  v.  Koyal  Insurance  Co.,  4  F.  &  F.  905  and  notes,  15  L. 
T.  N.  S.  72. 

I  q )  M^Leodv.  Citizens^  Insurance  Co.,  3  Russ  &  Ch.  (Novia  Scotia)  160. 

(r)  Cann  v.  Imperial  Fire  Insurance  Co.,  1  Russ.  &  Ch.  (Novia  Scotia)  240. 

(s)  Rice  V.  Provincial  Insurance  Co.,  7  U.  C  (C.  P.)  548.  Moore  v.  I^otection 
Insurance  Co.,  29  Maine  97 

{t)  Canada  Landed  Credit  Co.  v.  Canada  Agricultural  Insurance  Co.,  17 
Grant  (U.  C.)  418.    Laidlawv.  Liverpooland  London  Co  ,  13  Grant  (U.  C)  377. 

172 


CONDITIONS  IN   POLICIES. 


*200 


insured  do  his  best  to  save  his  goods  notwithstanding  that  he  is 
insured  (u). 

What  the  condition  includes. — But  the  condition  covers — (i.)  Fraud 
after  the  right  of  action  has  accrued,  such  as  (a)  any  attempt  to 
cheat  the  insurer  in  respect  of  the  amount  of  claim  or  otherwise 
(x)  •  (b)  any  statements  or  allegations  which  are  intentionally  false 
an(i  relevant  to  the  account  of  loss  whether  intended  or  not  to 
cheat  the  insurer. 

Condition  as  to  fraud  in  claim  and  arson. — (ii.)  Arson  of  the  in- 
sured or  any  claimant  under  the  policy,  including  any  person  who 
would  in  any  event  be  entitled  to  the  value  of  houses  or  goods  such 
as  a  mortgagee  or  bill  of  sale  holder  or  other  person  to  whose  order 
the  policy-moneys  were  made  payable.  The  crimes  in  question 
are  all  included  under  the  general  head  of  arson  (y). 

False  statement  in  claim. — False  in  the  condition  means  wilfully 
and  intentionally  false  (z).  If  the  plaintiff  prefers  a  claim  which 
he  knows  to  be  false  and  unjust  he  can  recover  nothing. 

The  false  statement  must  have  reference  to  the  claim  and  not  to 
any  immaterial  or  collateral  object  (a),  since  the  condition  is  to  be 
construed  with  reference  to  its  interest  and  object,  viz.,  the  account 
of  the  loss  and  value  of  the  property  insured  (6),  ("). 

As  to  fraud  in  the  claim. — Fraud  in  the  claim  is  quite  dis- 
tinct from  fraud  in  *the  proposals  and  negotiations  for  the  [*  200] 
policy  (c).    While  excessive  valuation  may  be  material  be- 
fore the  taking  of  a  risk  (ci),  and  make  the  policy  void  ah  initio, 
excess  in  the  claim  only  operates  by  destroying  the  remedy  and 
putting  the  claimant  out  of  court  (p). 

Excessive  claim  not  conclusive  of  fraud. — The  mere  fact  of  excess  is 
not  conclusive  of  fraud  (/).  .  Valuation  is  to  a  large  degree  matter 
of  opinion,  but  over-valuation  may  be  so  great  as  to  be  incompati- 

(«)  See  eases  under  removal,  p   121  ct  seq. 

(x)  Grciner  v.  Monarch  Co.,  Lr.  Can.  Jur.  100.  Seghetti  v.  Queen  Insurance 
Co.f  10  Lr.  Can.  Jur.  243.    Harris  v.  Lancashire  Co.,  10  Lr.  Can  Jur.  268 

[y)  This  is  dealt  with  more  fully  m  the  chapter  on  "  Risk." 
[z)  Jiritton  V.  Eoi/al  Insurance,  4  F.  &  F.  905,  15  L  T.  N.  S.  72.     Levy  v. 
Baillie,  7  Bing.  849.     Sleeves  v.  Sovereign  Fire,  4  Pug.  &  Burb.  ( New  Bruns. ) 
394.    lieg  v.  Soi/nes,  1  C.  &  K.  65.    Mason  v.  Agricultural  Mutual  Fire  Insur- 
ance Co.,  18  U.  C  (C.  P.)  19,  and  see  Chapman  v.  Pole,  22  L.  T.  N.  S.  306. 
(a)  Crowley  v.  Agricultural  Mutual  Fire  Insurance  Co.,  21  U.  C  (C.  P.)  507' 
(6)  Ross  V.  Commercial  Union  Assurance  Co.,  26  U.  C.  (Q.  B.)  552. 

(c)  See  Briiton  v.  Royal  Insurance  Co.,  4  F.  &  F  905  notes,  15  L.  T. 
N.  S.  Ii. 

(d)  lonides  v.  Pender,  L  R  9  Q.  B.,  531,  43  L.  J.  Q.  B.  227,  30  L.  T.  N.  S. 
547,  21  W  R  884. 

(e)  Meagher  v.  London  an  "  Lancashire,  7  Victoria  L.  R.  390. 
(Jf)  Ibid.    Levy  V.  liailL^,  7  Bing  8iQ. 

" "  The  company,  when  sued  for  loss,  must  show  fraud  or  intended  false  swear- 
ing as  to  a  material  matter.  Oahkosh  Packing  and  Provision  Co.  v.  Mercantile 
Int.  Co.,  81  Fed.  Rep.  200. 

173 


i'  51  ■ 


..\:\% 


*201 


THE  LAWS  OF  INSUnANJS. 


h   'i 


,'M  Jii 


if 'li^iii;' 


,M    'll 


m: 


\il: 


ble  with  good  faith,  or  may  be  dishonestly  made  (g).  Consecuently 
the  proper  direction  for  the  jury  in  such  a  case,  it  seems,  would  be 
to  find  for  the  plaintiff,  unless  on  the  evidence  they  thought  the 
claim  and  declaration  were  fraudulently  untrue.  In  Levy  v.  Baillie 
{h)  a  new  triiil  was  ordered  instead  of  entry  of  judgment  for  the 
defendants,  which  was  asked  for.  This  supports  the  view  that  the 
jury  must  expressly  find  fraud,  and  that  it  cannot  be  inferred  from 
tho  discrepancy  between  the  amount  claimed  and  their  verdict  (i). 

But  jurors  are  apt  to  be  exceedingly  charitable  in  their  construc- 
tion of  a  plaintiflf's  motives  whenever  the  defendants  are  an  insur- 
ance company  (k).  Said  a  learned  judge  in  Canada,  "  He  may  be 
sanguine  enough  to  expect  that  another  jury  may  be  found  to  deal 
with  hia  capp  in  as  large  a  spirit  of  charity  as  to  his  estimate  of  loss 
and  the  good  faith  of  his  affidavits  as  the  jury  which  has 
[*  201]  ^recently  upheld  his  honesty  of  purpose  in  swearing  that 
his  "actual  loss  was  twelve  times  larger  than  they  them- 
Pdlves  found  it  to  be  "  (0- 

Mere  misstatement  will  not  invalidate  claim. — Mere  mistakes  in  the 
statement,  &c.,  will  not  forfeit  the  claim  (m).  To  ask  that  they 
should  do  so  would  be  a  breach  of  good  faith  on  the  part  of  the  in- 
surers. Mere  overclaim  will  not  prove  nor  even  raise  a  presump- 
tion of  fraud.  Error  or  some  degree  of  exaggeration  or  over-esti- 
mate does  not  amount  to  fraud,  and  in  such  cases  the  insured  will 
be  entitled  to  recover  according  to  the  real  value  and  amount  of 
loss  actually  sustained  (n).  But  false  swearing  intended  to  de- 
ceive, not  insurers,  but  other  persons,  may  invalidate  a  claim  (o). 

Reckless  statement. — If  a  claimant  recklessly  values  his  property, 
not  knowing  nor  taking  the  trouble  to  ascertain  the  accuracy  of 
his  valuation,  he  can  hardly  complain  if  his  claim  be  treated  as 
fraudulent  (]))  within  the  principle  laid  down  in  Reese  River  Co.  v. 
Smithy  L.  R.  4  H.  L.  79,  39  \».  J.  Ch.  855,  especially  as  reckless 
under-stateraent  is  more  than  unlikely. 

Defence  of  arson. — Arson  is  discouraged  as  a  defence  to  an  action 
on  a  policy,  since  criminal  matters  are  thereby  m;  ied  up  with 


Riach  V.  Niagara  Dhtrict  Mutual 
Jersey  Ciiii  Co  v.  Nirhols,  35  Now 


(g)  Chapman  v.  Pole,  22  L.  T  N.  S  5106 
Fire  Imurance  Co.,  21  U.  C(C.  P.j  4(54. 
Jersey  Eq.  291. 

(A)  7  Bing  349  ;  sec  McMillan  v.  Gore  District  Mutual  Fire  Insurance  Co., 
21  U.  C.  (C  P.)  123,  and  6'om/<i!  ■  British  America  Assurance  Co.,  27  U  C. 
(Q.  B,)  473,  reviewing  all  cases. 

(i)  See  findings  in  Harris  v,  Jjondon  and  Lancashire,  10  Lr.  Can  Jnr.  20H, 
274. 

(Jc)  Riach  v.  Niagara  District  Mutual  Fire  Insurance  Co.,  21  U.  C.  (C.  P.) 
464,  472. 

(/)  MMillan  v.  Gore  District  Co ,  21  U.  C.  (C.  P.)  123. 

(m)  Joncav.  Mechanics'  Fire  Insurance  Co.,  13  Am.  Itcp 
V.  London  and  Lancashire  Fire,  7  Victoria  1j.  11.  3?K),  396. 
8  Ex.  819,  22  L.  J.  Kx  83n,  21  \..  T.  ir.a. 

(n)  Chapman  v.  Pole,  22  L.  T.  N.  S.  800. 

lo)  CUiflin  V.  Commonwealth  Insurance  Co.,  110  U.  8.  (3  Davis)  81. 

(p)  See  Meagher  v.  London  and  Lancashire  Fire,  7  Victoria  L.  11.  390,  894. 

174 


40.">,     Soo  Meagher 
Mason  V.  llarrey. 


CONDITIONS  IN   POLICIES. 


*203 


civil  proceedings  (g),  and  the  crime  must,  if  imputed,  be  so  fully 
proved  as  to  justify  the  jury  in  finding  the  plaintiff  guilty  on  in- 
dictment (r).  And  the  Court  will  be  very  unwilling  to  grant  a  new 
trial  where  such  a  defence  has  been  raised  (s). 

*Proof  of  his  loss  is,  of  course,  upon  the  assured.    He  [*  202] 
must  show,  if  required,  that  the  goods  were  on  the  prem- 
ises at  the  date  of  the  fire,  and  were  lost,  damaged,  or  stolen  (0. 

Oonditiati  that  company  may  enter  premises. — A  further  conditions 
in  fire  policies  is  as  follows: — "On  the  happening  of  any  loss  or 
damage  by  fire  to  any  property  in  respect  of  which  a  claim  is  or 
may  be  made  under  this  policy,  the  company,  without  being 
deemed  a  wrongdoer,  may,  by  its  authorized  officer  and  servants, 
enter  into  the  buildings  or  place  in  which  such  loss  or  damage  has 
happened,  and  for  a  reasonable  time  remain  in  possession  thereof, 
and  of  any  property  hereby  insured  which  is  container  therein,  for 
all  reasonable  purposes  relating  thereto  or  in  connection  with  the 
insurance  hereby  efiected  thereon,  and  this  policy  shall  be  evidence 
of  leave  and  license  for  that  purpose." 

Insurers  not  to  remain  on  premises  unreasonable  time. — This  condi- 
tion is  inserted  in  order  to  enable  the  Insurers  to  see  lor  themselves 
the  nature  of  the  damage  and  tlie  causes  thereof,  and  of  testing 
the  accuracy  of  the  proposcls  and  bona  fides  of  the  insured.  The^ 
are  thereby  given  leave  and  licei  e  to  enter  before  any  claim  is 
made  on  getting  notice  of  the  fire.  They  will  be  liable  to  an  action 
for  damages  if  they  retain  possession  unreasonably  long  (m),  and 
they  are  not  entitled  to  prevent  the  assured  seeing  the  salvage. 

i'urpose  of  condition  as  to  entry. — What  the  insurers  want  the 
license  to  enter  for  is  to  enable  them  to  ascertain — 

1.  The  exact  description  of  the  building  injured,  ^■y  see  if  it  tal- 
lies substantially  with  the  desciption  thereof  give,^  at  the  obtain- 
ing of  the  policy  and  of  the  risk. 

2.  The  nature  of  the  trade  carried  on  at  the  time  of  the  fire,  to 
Bee  whether  it  is  in  accordance  with  the  conditions. 

*3.  The  cause  of,  and  place  where,  the  fire  began,  with  a  [=**  203 
view  to  detecting  any  attempt  at  arson. 

4.  The  amount  of  damage  done  thereby,  and  that  they  may  be 
able  to  protect  the  salvage. 

The  insured  is  bound  to  give  nil  his  knowledge  on  these  subjects. 

Condition  as  to  reinstatement. — Fire  policies  also  invariably  contain 
a  condition  as  to  reinstatement,  which  usually  is  to  the  following 


Gnulstone  v. 


(q)  IMHon  V.  Royal,  4  F.   &  F.   006,  008,  15  L.  T.  N.  S.  72. 
Royal,  1  F.  &  F.  270. 

(r)  rhurtell  v.  Beaumont,  1  Bing.  889,  8  Moore  C.  P.  612,  2  L.  J.  C.  P.  4. 
The  American  Courts  hold  less  strict  proot  necessary. 

(,v)  (Soidd  V.  liritiah  America  Asmranre  Co.,  27  U.  C.  (  Q.  B.)  47!}.     But  see 
M'MiUan  v.  Gore  IHstrid.  21  U.  C  (C  P)  128. 

(/)  Ilari'li  V.  London  and  Lancashire  Fire,  10  L.'.  Cun.  Jur.  208. 

(n)  Olifield  V.  Price,  2  F.  &  h\  bO.    Norton  v.  Royal  Co.,  Times,  S  May  and 
18  Aug.  1886. 

175 


pr?,  52 


m 


r  ii^|;iiiii*' 


!  in::;!?' 

'     ''■      ,"    ii;| 


*204 


THE  LAWS  OF   INSURANCE. 


II  f 


fk 


effect : — The  company  may,  if  it  think  fit,  reinstate  or  replace  prop, 
erty  (x)  damaged  or  destroyed  instead  of  paying  the  amount  of  the 
loss  or  damage,  and  may  join  with  any  other  company  or  insurers 
in  so  doing  in  cases  where  the  property  is  also  insuied  elsewhere  (»•). 

This  condition  as  regards  policies  on  English  realty  or  chattels 
affixed  to  the  freehold  is  in  the  main  only  declaratory  to  the  law  as 
enacted  by  s.  83  of  14  Geo.  III.  c.  78.  That  Act  does  not  apply  to 
Scotland  {y)  or  Ireland  (z),  nor  to  personalty  in  England  (a).  Con- 
dition gives  larger  powers  than  statute. — As  to  those  countries  and 
property  of  that  kind,  the  condition  enlarges  the  powers  of  the  in- 
surers, and  the  time  for  reinstatement  is  also  usually  enlarged  (6) 
by  the  terms  of  the  condition. 

Moreover,  the  condition  enables  the  insurers  to  reinstate  without 
reason  given  and  where  there  is  no  suspicion  (c-),  so  that  they  can 
reinstate  in  cases  of  dispute  as  to  the  amount  of  damage,  or  where 
they  think  reinstatement  will  '^e  cheapest  for  them.  They  are 
under  statutory  obligations  to  reinstate  in  suspicious  cases. 
[*  204]  '^Damage  may  be  repaired. — The  right  to  reinstate  under 
the  condition  arises  whether  the  destruction  is  total  or 
partial  (d). 

Whether  company  must  abide  by  election  to  reinstate. — If  the  com- 
pany elect  to  reinstate,  they  must  do  so,  and  cannot  fall  back  on 
payment  (e),  unless  by  failure  of  the  assured's  title  to  the  locus  in 
quo  the  insurers  cannot  lawfully  enter  to  reinstate  (/).  The  con- 
verse is  equally  true.  The  power  to  combine  with  other  insurers  in 
reinstating  is  important  in  cases  where  there  are  several  interests  in 
the  property  insured,  as  in  case  of  mortgages  (g). 

Condition  as  to  forfeiture  of  premiums. — The  last  condition  in  a  iire 
policy  is  to  the  following  effect: — In  all  cases  where  the  policy  is 
void  or  has  ceased  to  be  in  force  under  any  of  the  foregoing  condi- 
tions, all  moneys  paid  to  the  insurers  in  respect  thereof  will  be  for- 
feited. Being  a  condition  as  to  forfeiture,  it  may  be  waived.  And 
it  does  not  seem  to  apply  to  cases  where  the  policy  does  not  attach 
at  all. 

Waiver  of  the  forfeiture. — It  may  be  asserted  broadly  that  if, 


in 


{x)  Reinstatement  is  "  Replacement  in  forma  specifica,"  Sutherland  v.  Sun 
Fire,  14  C.  S.  ('.  (2nd  series)  775. 
.  (.v)  liimil  V.  Jtnj/al  Exchange,  1  C.  S.  C  (Istseries)  174. 

(z)  Being  prior  to  the  Union. 

(a)  Ex  parto  Gorele!/,  4  De  G.  J.  &  S.  477,  34  L.  J.  Bkcy.  1,  11  L.  T.  N.  S.  819, 
10  Jur.  N.  8.  1085,  13W.R.  60. 

(h)  Siitlierland  v.  Sun  Fire,  supra. 

(c)  Jiissett  V.  Jioi/al  Exchange,  1  C.  S.  C.  (Ist  series)  174. 

{({)  Sutheiland  v.  Sun  Fire.  14  C.  S.  C.  (2nd  scries)  775. 

(e)  Ibid,  779.     lirown  v.  Jfnj/al,  1  E.  &  E   86;J,  28  L.  J.  Q.  11.  27B,  31  L.  T. 
n;,  7  W.  R,  479,  5  Jur.  N.  S  lv56. 

(/)  Anderson  v.  Commercial  Union,  55  L.  J.  Q.  B.  140,  84,  W.  R.  189. 

ig)  Scnttink  Amicable  Aii.rriation  v.  No7'them  Assurance  Co.,  21  Sc  Ti.  U. 
189.11  C.  S.  C.  (4tli  series)  287. 

(2<3a)  Sec  chiip.  12  on  Reinstatemeut. 

176 


'if 


CONDITIONS  IN   POLICTES. 


*205 


any  negotiations  or  transactions  with  the  insured  after  knowledge 
of  the  forfeiture,  the  insurer  recognizes  the  continued  validity  of  the 
policy,  or  does  acts  based  thereon,  or  requires  the  assured  by  virtue 
thereof  to  do  some  act  or  incur  some  tiouble  or  expense,  the  forfeit- 
ure is  waived  (h). 

Conditions  of  life  insurance  different  from  those  of  other  insurance. — 
The  conditions  of  life  insurance  differ  widely  from  those  in  other 
insurance.  There  can  be  no  conditions  as  to  proof  of  damage  in  a 
life  policy,  the  contract  apart  from  questions  of  bonus  being  to  p!«v 
a  liquidated  sum  on  a  given  event.  Proof  of  age  (")  and  death  (") 
is  all  that  is  needed,  and  often  the  former  is  admitted  at  the  out- 
set. 

^Kinds  of  conditions. — The  other  conditions  of  life  insur-  [*  205] 
ance  may  be  classified  as  follows : — 

(a)  Limiting  the  region  wherein  the  insurance  operates. 

(b)  Limiting  the  occupations  in  the  exercise  of  which  the 
ad.^t  ;kI  is  protected. 

(^v  I  Specifying  certain  modes  of  death,  on  the  happening  of 
which  the  sum  insured  will  not  be  payable,  e.  g..  suicide,  hands  of 
justice,  or  duel,  or  i»ct  violating  the  law. 

(d)  Requiring  timely  payment  of  premiums,  but  providing  a 
means  of  reviving  lapsed  policies  where  the  risk  has  not  been  ma- 
terially changed  in  the  interval. 

(e)  Making  the  undertaking  of  the  risk  conditional  on  the  truth 
of  all  statements  or  answers  made  on  the  application  to  insure, 
whether  the  insurance  be  on  own  or  another  s  life,  and  whether 
the  statements  be  made  by  the  assured  or  his  agents. 

Conditions  may  m^ke  contract  void  or  voidable.  Waiver  of  breach. — 
It  will  be  seen  that  under  the  Inst  class  of  conditions  only  can  the 
policy  be  void  ab  initio,  a,  b,  c,  are  conditions  which  amount  to 
exceptions  from  the  risk  taken.  It  seems,  however,  that  in  ttie 
case  as  well  of  a  condition  making  the  policy  void  as  of  one  mak- 
ing it  voidable,  the  non-fulfilment  of  the  condition  may  be  waived 
by  the  insurers,  if  they  do  any  act  amounting  to  an  affirmance  of 
the  contract  nfter  knowledge  of  the  breach  of  the  condition  (t). 

Leave  and  license  by  the  insurer  to  break  the  condition,  will  also 
save  the  rights  of  the  insured  (j). 


(h)  Titus  V.  Olen  Falls  Co  81  N.  Y.  410,  419.  See  Robertson  v.  Metropol- 
itan Life  Jnsiirance  (>>.,  88  N.  Y.  C41,  and  Insurance  Co.  v.  Norton,  G  Ottc  (96 
U.  8.)  '2'M,  wl\icli  goes  into  English  ouhcs.     Ward  v.  Da}/,  4  Best  &  Sm.  387. 

(?)  Armstronrf  v  Turqiiand,  9  fr.  C.  L.  R.  82.  Wing  v.  Ilarvei/,  B  Do  O.  M. 
&  (}.  2(ir>  28  L.'J.  Ch.  511,  18  Jur.  894,  23  L.  T.  120,  it  W.  R.  870.  Supple  v. 
Cann,  9  Ir.  C.  L.  R.  1. 

( i)  IMs  V.  Srotiish  Equitable,  9  II.  &  N.  19,  26  L.  .1.  Ex.  V79,  29  L.  T.  11«,  r, 
W.'R.  592,  8Jiir  N.  S.  417. 

'*  F\»lHeTenrcsent4ition  as  to  ,i(i((  rnndoreti  ft  contract  invalid.  Sweet  v.  (Hti- 
tens'  Mtihud  Relief  Society,  78  Me.  641. 

^''  Dc'iiiil  of  linbility  is  a  wiiivor  of  right  to  require  proof  ct  death.  Kanatu 
Protective  Union  v.  Whitt,  86  Kan   700. 


±2  PORIKR  ON  INSURANCB. 


177 


■m 


*207 


THE   LAWS  OF  INSURAXCE. 


["'206]  *Non-disclomre  of  medical  attendant.  Of  di sense. —\i  (he 
assured  fails  to  disclose  the  names  of  medical  men  cm- 
j)loye<l  by  him,  flnd  answers  as  if  he  had  none,  and  omits  to  state 
that  he  was  afflicted  with  disease,  having  reasonable  grounds  for 
believing  that  he  was  so  afflicted,  his  policy  will  be  void. 

Age.  Prooj  of  age.— So  also  if  he  misstates  his  age.  And  if  it 
is  not  admitted  in  the  policy,  parol  proof  thereof  cannot  be  given 
until  the  non-existence  of  baptismal  or  birth  register  has  been 
proven  (k). 

As  to  omissiems.  Misrepresentations. — The  condition  as  to  misrep- 
resentation or  omission  to  communicate  material  facts  refers  only 
to  the  time  of  negotiating  for  and  effecting  the  policy,  and  not  to 
any  subsequent  time  (0-  This  is  more  especially  applicable  to  lil'e 
policies,  the  premiums  being  settled  with  reference  to  the  assured 'a 
health  and  prospect  of  life  at  the  time  when  the  policy  is  granted. 

Geographical  limits. — If  a  life  policy  contain  a  stipulation  that 
the  assured  is  not  to  go  beyond  certain  limits,  if  the  insured  goes 
even  for  an  instant  outside  those  limits,  though  without  the  least 
injury  to  his  health,  the  condition  attaches  and  the  policy  becomes 
void  (w),  and  is  not  merely  suspended  while  the  assured  is  without 
the  limits  unless  some  provision  to  that  eflTect  is  contained  in  the 
policy. 

Even  where  such  a  condition  is  inserted  in  a  policy,  provisions 
are  upual  allowing  the  assured  at  a  price  to  obtain  a  license  to  go 
outside  the  specified  limits.  And  tnere  is  a  general  tendency  on 
the  part  of  insurers  to  remove  local  restrictions  and  grant  "  whole- 
world  "  policies  BO  as  to  avoid  the  obvious  inconveniences  of  the 
older  system. 

Payment  of  premium  prevented  by  war. — Where  a  man  was  pre- 
vented from  performing  the  condition  to  pay  the  annual  premium 
by  a  state  of  war,  a  mnjority  of  the  Supreme  Court  of  the 
[*  207]  United  States  *h eld  that  the  policy  must  be  regarded  as 
extinguished  by  the  non-payment  ot  the  premiums,  though 
caused  by  the  existence  of  war;  but  that,  such  failure  being  caused 
without  the  fault  of  the  insured,  he  was  entitled  to  recover  from 
the  insurers  the  surrender  value  of  the  policy  with  interest  from 
the  close  of  the  war  (n).  Return  from  abroad  after  expiry  of  licence 
prevented  by  illness. — And  it  has  been  held  also  in  America  that  a 
man  licensed  for  a  time  to  go  outside  the  territorial  limit  prescribed 
in  his  policy  will  not  lose  the  benefit  thereof  if  hindered  from  re- 
turning by  illness  ultimately  fatal,  but  only  resulting  in  his  death 
after  expiry  of  the  licence  (o).    Delay  to  act  on  licence. — And  in 


{k)  Hartigan  v.  International  Life,  8  Lr.  Can.  Jur.  208. 

[1)  Pirn  V.  Reid,  G  M.  &  O.  l,  12  L.  J,  C.  P.  209,  0  Scott  N.  R.  982. 

(m)  Beacon  Life  and  Fire  Co.  v.  Gibb,  1  Moore  P.  C  N.  S.  73,  100,  7  L.  T. 
N.  8.  74,  9  Jur.  N.  S.  186,  11  W.  R.  194. 

(«)  f^cw  York  Life  v.  Statham,  8  Otto  (93  U.  8. )  24. 

(o)  Baldwin  v.  New  York  Life,  10  N.  Y.  Sup.  Ct  (S  Bosworth)  680. 

178 


CONDITIONS  IX   POLICIES. 


*208 


England  it  has  been  held,  that  where  a  licence  was  given  to  the  in- 
Bured  to  reside  abroad  for  one  year,  and  he  delayed  to  go  abroad 
for  three  years,  and  then  left  this  country,  and  died  within  a  year, 
lie  was  held  to  have  acted  within  the  licence  (p). 

Policy  mr  autre  vie  in  Scotland  not  avoided  by  suicide. — In  Scotland, 
policies  by  persons  on  lives  other  than  their  own  are  not  avoided 
by  suicide  of  the  life  insured  (7),  and  in  this  couni^-y  it  seems  to  be 
usual  in  policies  on  the  lives  of  others  to  omit  the  coiidition  against 
Buicide. 

Military  or  naval  service. — No  cases  seem  to  have  aiisen  in  Eng- 
land under  the  condition  as  to  military  service,  since  English  poli- 
cies usually  stipulate  only  that  active  service  f.hall  be  a  ground  of 
enchancement  of  premium.  The  extra  premium  is  usually  paid 
and  no  questions  arise.  In  America  in  absence  of  such  a  stipula- 
tion it  has  been  decided  that  a  clerk  in  the  adjutant-general's  de- 
partment not  subject  to  military  law  is  not  in  military  service  (r), 
and  that  a  man  will  be  none  the  less  in  such  service  if  he  is  taken 
as  a  conscript  or  goes  merely  to  avoid  compulsion  («). 

^Person  effecting  policy  on  another^s  life  bound  by  hia  misrep-  [*  208] 
resentation. — He  who  takes  out  a  policy  on  the  life  of  an- 
other person  in  which  he  has  interest  will  be  bound  by  wilful  mis- 
representation or  suppression  of  the  truth  by  such  person  to  induce 
the  insurers  to  grant  the  policy,  and  more  especially  if  such  repre- 
sentations are  incorporated  in  the  policy.  For  thereby  the  bargain 
IS  only  conditional,  and  it  is  equally  a  condition  in  the  policy,  be  it 
made  by  whomsoever  it  may  (t).  Independently  of  the  condition, 
the  person  on  whose  life  the  policy  is  to  be  made,  if  referred  to  for 
information,  is  made  thereby  agent  of  the  assured,  and  the  latter 
will  be  bound  bv  his  statements  (m).  It  ':>mkes  no  difference  that 
the  assured  had  simply  told  the  insurer's  agent  to  make  inquiries 
of  the  person  on  whom  the  policy  was  to  be  made. 

But  if  the  assured  has  made  most  of  the  representations,  and 
only  refers  to  the  life  on  certain  spr cific  points,  the  knowledge  of 
the  life  outside  that  particular  maiter  is  not  knowledge  of  the  as- 
sured (a;). 

Concealment  of  refusal  by  forftier  company  to  accept  insurance. — An 
applicant  for  insurance  who  conceals  from  the  agent  to  whom  he 
applies  that  he  has  already  applied  to  and  been  refused  by  an  agent 
of  the  same  company,  conceals  a  material  fact.  Knowledge  of  the 
applicants  previous  dealings  with  other  insurers  is  at  leist  ns  ma- 

(p)  Notham  v.  Anchor  Co.,  4  C.  B.  N.  S.  476,  27  L.  J.  C.  P.  275,  4  Jur.  N.  8. 
712,  6W.  R.  688,  81  L.  T.  202. 

(q)  Bell's  Principles  2''1. 

(r)  New  York  Life  v.  Hendren,  24  Gratt.  (Vt  1  ()40. 

(i)  Dillard  v.  JIfanhattan  Life,  9  Am.  Rep.  ifi7. 

(t)  Maynard  v.  Rhode,  1  C  &  P.  860,  808,  per  Bayley,  J.,  5  Dowl  A  R.  266. 

(«)  Everett  v.  Desborough,  5  Bing.  608. 

(x)  Huchman  v.  Femie,  8  M.  &  W.  606,  7  L.  J.  N.  8.  Ex.  1(13,  2  Jur.  144. 

179 


■  i 


!  t; 


*  208  THE  LAWS  OP  INSURANCE. 

t 

terial  in  fire  as  in  life.  Indeed,  the  onljr  thing  most  fire  insurera 
want  to  know  is  the  character  of  the  insured,  and  the  questions 
asked  hy  them  are  mainly  directed  to  his  dealing  with  other  insur- 
ance omces  (y). 

(y)  Goodwin  v.  Lancashire  Fire,  16  Lr.  Cai.  Jur.  298,  18  do.  1.  London  As- 
surance V.  ManaeU,  11  Ch.  D.  868,  48  L.  J.  Cb.  831,  27  W.  R.  444.  Daintree't 
claim,  18  W.  B.  896. 


I'i 

ilVt 

''^ 

f] 

1 

:|M 

n 

1  ' 

1' 

I'M 

1  i 

i 

mi 

180 


ARBITRATION. 


210 


♦CHAPTER  IX. 

ARBITRATION. 


[*209 


Earlier  view  of  agreements  to  refer.  Juriadiction  of  Courts  not  to  be 
ousted. — An  unqualified  agreement  to  refer  to  arbitration  and  pre- 
cluding the  contracting  parties  from  suing  in  tiie  Queen's  Courts  is 
invalid,  for  the  Courts  will  not  allow  their  jurisdiction  thus  to  be 
ousted.  And  where  a  policy  of  insurance  contained  a  clause  that 
in  case  of  loss  or  dispute  it  should  be  referred  to  arbitration,  it  was 
held  that,  if  there  had  been  a  reference  depending  or  made  and  de- 
termined, it  might  have  been  a  bar,  but  tne  agreement  of  the  par- 
ties could  not  oust  the  Court ;  and  as  no  reference  had  been  nor 
was  any  depending,  the  action  was  well  brought,  and  the  plaintiff 
must  have  judgment  (a). 

In  Horton  v.  Sayer,  Pollock,  C.  B.,  said :  "  In  this  case  the  deed 
discloses  nothing  more  than  an  agreement  generally  to  refer  all 
disputes  to  arbitration,  and  that  does  not  prevent  the  plaintiff  from 
maintaining  this  action  "  (6). 

Rule  as  to  ouster. — Regarding  the  rule  that  the  jurisdiction  of  the 
Court  should  nc  t  be  ousted,  Coleridge,  J.,  said :  "  I  certainly  am  not 
disposed  to  extend  the  operation  of  a  rule  which  appears  to  have 
been  founded  on  very  narrow  grounds,  directly  contrary  to  the 
spirit  of  later  times,  which  leaves  parties  at  full  libertv  to  refer  their 
disputes  at  pleasure  to  public  or  private  tribunals  "  (c). 

*Scottv.  Avery.  Oldrtikqualified.-^AndinScotty.Averyityv&B  [*  210] 
decided  that  where  parties  have  entered  into  a  contractfor  in- 
demnity, they  may,  if  they  choose,  agree  that  in  the  event  of  any  loss 
occurring  such  loss  shall  be  ascertained  by  an  arbitrator  they  may 
select,  and  they  may  ajgree  to  pay  such  loss  when  it  has  been  ascer- 
tained, and  not  otherwise  (d).  This  case  has  been  the  subject  of 
much  comment  and  many  explanations.  Staiement  of  law,  per  Brett, 
M.  R. — In  Edwards  v.  Aberayron  Company,  Brett,  M.  R..  said  («) : 
"  The  true  limitation  of  Scott  v.  Avery  seems  to  me  to  be  that  if  par- 
ties to  a  contract  agree  to  a  stipulation  in  it,  which  imposes  as  a  con- 
dition precedent  to  the  maintenance  of  a  suit  or  an  action  for  breach 
of  it  the  settling  by  arbitration  of  the  amount  of  damage  or  the 
time  of  paying  it,  or  any  matters  of  that  kind,  which  do  not  go  to 
the  roo  of  the  action,  i.  e.,  which  do  not  prevent  any  action  at  all 

(a)  Kill  V.  IIolMter,  1  Wils.  129.     Thompson  v.  Charnock,  8  T.  R.  189. 

(6)  Horton  v.  Sayer,  4  H.  &  N.  643,  29  L.  J.  Ex.  28. 

(c)  Srott  V.  Avery,  5  H  L.  C.  811,  848,  25  L.  J.  Ex  808,  2  Jur.  N.  S.  81S,  4 
W.  R.  746. 

id)  Scott  V.  Avery,  5  H.  L  •?.  811,  25  L.  J.  Ex.  808,  2  Jur.  N.  S.  815, 4  W.  R. 
746.     Broirnv.  Overhury,  11  Ex.715. 

(«)  1  Q.  B.  D.  56«,  596,  84  L.  T.  N-  8.  467. 

181 


[t, 


',  :1    t: 


f  \i  J'V 


•)> 


I") 


*211 


THE  LAWS  OF  INSURANCE. 


■.I 


from  being  maintained,  such  stipulation  prevents  any  action 
being  maintained  until  the  particular  facts  nave  been  settled  by 
arbitration ;  but  a  stipulation  in  a  contract  which  in  terms  would 
submit  every  dispute  arising  on  the  contract  to  arbitration,  and  so 
preclude  the  suffering  or  complaining  party  from  maintaining  any 
suit  or  action  at  all  in  respect  of  any  breach  of  the  contract,  doea 
not  prevent  an  action  from  being  maintained ;  it  gives  at  most  a 
right  of  action  for  not  submitting  to  arbitration,  and  for  damages 
probably  nominal.  And  this  rule  is  founded  on  public  policy.  It 
m  no  way  prevents  parties  from  referring  to  arbitration  disputes 
which  have  arisen ;  but  it  does  prevent  them  from  establishing,  as 
it  were,  before  they  dispute,  a  private  tribunal  which  may  from  ig. 
norance  do  what  tlie  invented  tribunal  here  did,  namely,  act  and 
persist  in  acting  in  contravention  of  the  most  elementary  princi- 
ples of  the  administration  of  justice."  * 
[*  211]  ^Statement  of  law,  per  Bramwell,  B. — The  effect  of  Scott  v. 
Avery  is  also  well  stated  in  Elliot  v.  Rvyal  Exchange  (/),  by 
Bramwell,  B. :  "  If  two  persons,  whether  in  the  same  or  in  a  diti'erent 
deed  from  that  which  creates  the  liability,  agree  to  refex  the  matter 
upon  which  the  liability  arises  to  arbitration,  that  agreement  does 
not  take  away  the  right  of  action.  But  if  the  original  agreement 
is  not  simply  to  pay  a  sum  of  money,  but  that  a  sura  of  money 
shall  be  paid  if  something  else  happens,  and  that  somei:;hing  else  is 
that  a  third  person  shall  settle  the  amount,  then  no  cavise  of  action 
arises  until  the  third  person  has  so  ascertained  the  sum,  for  to  say 
the  contrary  would  be  to  give  the  i)arty  a  different  measure  or  rate 
of  compensation  from  that  for  which  he  has  bargained.  This  is 
plain  common-sense,  and  is  what  I  understand  the  House  of  Lords 
to  have  decided  in  Scott  v.  Avery'^  (g). 

StateTtierd  of  law,  per  Jessel,  M.  R. — There  are  onlv  two  cases  where 
agreement  to  refer  can  be  successfully  pleaded — nrst,  where  the  ac- 
tion can  only  be  brought  for  the  sum  named  by  the  arbitrator; 
secondly,  where  it  is  agreed  that  no  action  shall  be  brought  till 
there  has  been  an  arbitration,  or  that  arbitration  shall  be  a  condi- 
tion precedent  to  the  right  of  action  (h).    In  all  other  cases,  where 

(/)  L.  R.  2  Ex.  237,  245,  30  L.  J.  Ex.  129, 16  L.  T.  N.  S.  399,  16  W.  R.  907, 
and  see  Dawson  v.  Fitzgerald,  infra. 

(g)  See  Tredwen  v.  Holman,  1  H.  &  C  73,  79,  7  L.  T.  N.  S  127,  10  W.  R. 
652.  3t  L.  J.  Ex.  898,  8  Jur.  N.  S.  1080.  WHght  v.  Ward,  20  W.  R.  21,  24  L. 
T.  N.  S.  439.  Harvey  v.  Beckwith,  2  H.  &  M.  429,  10  L  T.  N.  S.  632.  Babbage 
V.  Coulburn,  9  Q.  B.  D.  286,  52  L.  J.  Q.  B.  50.  Willesford  v.  Watsm,  8  Ch. 
Apn.  473,  42  L.  J.  Ch.  447,  28  L  T.  N.  S.  428,  21  W.  R.  850. 

(h)  Per  Jessel  M.  R.,  in  Dawson  v.  Fitzgerald,  1  Ex.  D.  267  at  260,  45  L.  J. 
Ex.  894,  24  W.  R.  778.  Edwards  v.  Aberayron  Mutual  Ship.  Co.,  1  Q.  B.  D. 
663,  34  L.  T.  N.  S.  467.  Rnper  v.  Lendon,  28  L.  J.  Q.  B.  250,  1  E.  &  E.  825,  7 
W-  R-  441,  6  Jur.  N.  S.  491.  Scott  v.  Liverpool  Corporation,  28  L.  J.  Ch.  230, 
8  De  G.  &  J.  334,  82  L  T.  266,  7  W.  R.  158,  6  Jur.  N.  S.  106.  Wright  v.  Ward, 
24  L.  T.  N.  S.  489,  20  W.  R.  21. 

*  Refusal  of  insurer  to  pay  any  sum  whatever  precludes  him  from  relying,  when 
sued,  on  clause  providingtor  arbitration  before  suit.  Western  if.  ds  C  Ina.  Co.  7. 
Putnam,  20  Neb.  881. 

182 


ARBITRATION. 


*213 


there  is  first  a  covenant  to  pay,  and  secondly  a  covenant  to  refer, 
the  covenants  are  distinct  and  collateral  (i),  and  the  plain - 
tiflf  may  sue  on  the  first,  leaving  the  defendant  *to  pursue  [*  212] 
one  of  two  courses — either  to  bring  an  action  for  not  refer- 
ring, or  to  apply,  under  s.  11  of  the  Common  Law  Procedure  Act, 
1854,  to  stay  the  action  until  there  has  been  an  arbitration,  in  which 
case  a  judge  has  power  to  prevent  the  case  going  to  a  jury  if  the 
arbitration  can  be  fairly  enforced  (k). 

Qmmm  Law  Procedure  Act,  185^,  8.  11. — By  the  Common  Law 
Procedure  Act,  1854,  s.  11,  it  is  enacted  that  whenever  the  parties 
to  any  writing  shall  agree  that  any  difference  between  them  shall 
be  referred  to  arbitration,  and  shall  nevertheless  commence  any 
action  in  respect  of  the  matters  so  agreed  to  be  referred,  it  shall  be 
lawful  for  the  Court  before  which  the  action  is  brought,  upon  being 
satisfied  that  no  sufficient  reasons  exists  why  such  matters  should 
not  to  be  referred  to  arbitration,  and  that  the  defendant  was  at  the 
time  of  the  bringing  of  such  action  and  still  is  ready  and  willing 
to  concur  in  all  acts  necessary  and  proper  for  causing  such  matters 
so  to  be  decided  by  arbitration,  to  make  a  rule  or  order  staying  all 
proceedings  in  sucli  action  upon  such  terms  as  to  such  Court  or 
judge  may  seem  fit,  provided  that  any  such  rule  or  order  may  at 
any  time  afterwards  be  discharged  or  varied  as  justice  may  re- 
quire (/). 

It  is  not  a  condition  precedent  to  the  right  of  the  Court  to  refer 
to  arbitration  that  all  the  parties  must  before  action  have  been 
willing  to  go  to  arbitration  (m). 

Award  not  a  condition  precedent  to  action. — A  clause  stipulating  that 
all  matters  in  difference  which  should  arise  touching  the  agreement 
should  be  submitted  to  arbitration,  and  prohibiting  any  action  be- 
ing brought  in  respect  of  the  matters  actually  submitted  to 
arbitration,  is  a  collateral  and  independent  agreement;**  and  [*  213] 
an  award  thereunder  is  not  a  condition  precedent  to  such 
action,  except  as  regards  such  sums  as  under  the  agreement  are 
not  payable  until  the  amount  thereof  has  been  ascertained  by  such 
award  (n). 

Ascertainment  of  amount  condition  precedent  to  action. — In  Braun- 
8tein  v.  Accidental  Death  Company  (o)  the  covenant  was  to  pay  such 
sum  as  should  appear  iust  and  reasonable,  and  in  proportion  to 
the  injury  received,  such  sum  to  be  ascertained  in  case  of  differ- 

(i)  Collins  V.  Locke,  4  App.  Cas.  C74,  48  L.  J.  P.  C.  68,  41  L.  T.  N.  S.  292, 
28  W.  It.  189. 

(k)  Per  Jessel,  M.  R.,  Dawnon  v.  Fitzgerald,  1  Ex.  D.  260,  45  L.  J.  Ex.  894, 
24  W.  R,  773.  See  also  j)er  Page  Wood,  V.  C  .  in  Cooke  v.  Cooke,  4  En.  77,  30 
L.  J.  Ch.  480,  16  L.  T.  N.  S.  81»,  15  W.  R.  981. 

(1)  17  4:18  Vict,  c  126,  s.  11. 

(m)  WiUesford  v.  Wataon,  8  Ch.  App.  478,  42  L.  J.  Ch.  447,  28  L.  T.  N.  S. 
428,  21  W.  R.  350. 

(m)  Collins  V.  Locke,  4  App.  Cas.  674,  48  L.  J.  P.  C.  68,  41  L.  T.  N.  S.  292, 
28  W.  R.  189 

(o)  1  B.  &  S.  782,  81  L.  J.  Q.  B   17  (1861),  5  L.  T.  N.  S.  550,  8  Jur.  N.  S.  506. 

183 


:.i 


''i'ii^  i 


■  ]■•■ 


m 


*214 


THE   LAWS   OF  INSURANCE. 


ence  in  manner  provided  by  tlie  stipulations  an(^ conditions  in- 
dorsed on  the  policy.  Tne  Court  held  i)erformance  of  the  stipula- 
tion to  be  a  condition  precedent  to  the  right  to  sue. 

View  that  where  insurers  dispute  any  liability,  action  lies — A  policy 
of  insurance  against  fir6  stated  that,  if  any  difference  should  arise 
over  any  claim,  it  should  be  immediately  submitted  to  arbitration, 
and  such  arbitration  should  be  made  by  one  or  two  persons  to  be 
indifferently  chosen  by  the  assured  or  his  legal  representative,  and 
by  the  office  or  by  such  third  person  as  the  other  arbitrators  should 
ippoint,  and  no  compensation  should  be  payable  until  after  an 
siward  determining  the  amount  thereof  should  be  duly  made.  In 
an  action  on  the  policy,  it  was  held  that  the  assured  might  main- 
tain an  action  on  such  policy,  notwithstanding  the  condition, 
where  it  appeared  that  the  insurers  denied  the  general  right  of  the 
assured  to  recover  anything,  and  did  not  merely  question  the 
amount  of  damage  (p),  but  see  Scoii  v.  Avery. 

Where  an  adjustment  by  arbitration  was  made  a  condition  pre- 
cedent, and  the  insurers  alleged  that  the  policy  was  void  by  reason 
of  concealment,  it  was  held  in  Victoria  that  the  assured 
[*  214]  could  not  sue  till  after  *such  adjustment  (g).  This  does 
hot  seem  consistent  with  the  last  case ;  and  in  a  case  in 
Lower  Canada  where  a  reference  was  made  to  valuers  without 
waiver  of  the  conditions  of  the  policy,  it  was  held  that  the  insurer 
had  not  lost  his  right  to  use  the  conditions  of  the  policy  as  to  for- 
ff  iture  if  such  were  proved  (r). 

Construdion  of  condition  to  refer. — Gorman  v.  Hand-in-Hand  {^s) 
was  the  case  of  a  policv  containing  a  covenant  (subject  to  the  con- 
ditions indorsed  on  tne  policy)  to  pay  or  make  good  all  loss  or 
damage  not  exceeding  the  amount  insured,  and  a  condition  to  refer 
diflferences, "  which  condition  is  to  be  deemed  and  taken  to  be  an 
agreement  to  refer."  The  Court  held  that  this  meant  that  the 
remedy  for  the  breach  of  that  condition  was  action  or  application 
under  the  Irish  Common  Law  Procedure  Act,  1856,  s.  16,  which 
remedy  was  wholly  inapplicable  to  any  provision  qualifying  the 
covenant  to  pay,  and  postponing  the  cause  of  action  thereon  until 
ascertainment  by  arbitration,  since  application  under  the  statutes 
presupposes  an  existing  cause  of  action,  while  the  essence  of  the 
provision  qualifying  the  covenant  is  that  the  cause  of  action  is  not 
complete. 

A  policy  of  insurance  against  accident  contained  (t)  a  condition 
that  all  disputes  should,  if  the  assured  or  his  legal  personal  repre- 
sentative or  the  company  required  it,  be  referred  to  arbitration  in 
the  manner  specified  in  the  company's  private  Act  (u),  which  em- 

(p)  Goldstone  v.  Osborne,  2  C.  &  P.  650. 

{q)  London  and  Lancashire  v.  Honey,  2  Victoria  L.  R.  7. 

(»•)  La  Rocque  v.  Royal,  23  Lr.  Can.  Jur.  217. 

Is)  I.  R.  11  C.  L.  224. 

h)  Minifie  v.  Railway  Passengers'  Jic.,  44  L.  T.  N.  S.  662. 

(tt)  27  k  28  Vict.  c.  cxxt.  s.  88. 

184 


ARBITRATION. 


*216 


powered  the  Court  or  a  Judge  to  stay  proceedings  contrary  to  the 
Act  (a;).    Action  stayed,  fraud  not  charged. — ^The  Court  ordered  a 
stay  of  proceedings  in  an  action,  as  no  issue  of  fi:aud  was 
raised,  and  no  reason  appeared  why  the  matter  in  ^question  [*  215] 
could  not  or  ought  not  to  be  referred  to  arbitration. 

Right  to  sue  where  fraud  in  question.— Some  discussion  has  ariHen 
on  the  question  whether  if  fraud  were  charged  this  would  entitle 
the  plaintiflF  to  a  jury.  Pollock,  B.,  in  Minifie  v.  Railway  Passengers', 
&c.,  says,  "  Where  fraud  is  imputed  to  the  claimant,  whether  he  be 
the  assured  or  his  personal  representative,  it  would  be  difficult  to 
say  that  the  plaintiflF  ought  not  to  have  the  oi)portunity  of  clearing 
himself  from  so  grave  a  personal  imputation  in  open  court"  (y). 

And  this  view  has  been  taken  in  Wallis  v.  Hirsch  (2),  approved  in 
Hirsch  v.  Im  Thum  (a).  Jessel,  M.  R.,  in  Russell  v.  Russell  (6),  ex- 
pressed himself  by  no  means  satisfied  that  the  mere  desire  of  the 
person  charging  the  fraud  was  a  sufficient  reason  for  the  Court  re- 
fusing to  send  the  case  to  arbitration,  although  if  the  person  charg- 
ing the  fraud  did  not  desire  a  reference  the  Court  ought  to  investi- 
gate the  circumstances,  and  might,  on  a  'primQ.  facie  case  of  fraud 
being  shown,  in  the  exercise  of  its  discretion  refuse  the  order. 
Where,  however,  the  person  charged  with  the  fraud  desires  an  in- 
vestigation before  a  public  tribunal,  the  Court  ought,  said  his  lord- 
ship, as  a  rule,  to  exercise  its  discretion,  and  to  refuse  to  refer  the 
matter  in  dispute  to  arbitration. 

Seaworthiness  not  to  he  referred. — On  this  principle  it  would  seem 
that  Lord  D  nman  held,  in  Harrism,  v.  Douglas,  3  A.  &  E.  396,  that 
an  issue  as  to  the  seaworthiness  of  a  vessel  was  for  a  jury  and  not 
matter  of  reference  within  an  arbitration  clause. 

*And  in  Scotland  it  has  been  held  that  after  a  claim  has  [*  216] 
been  submitted  to  arbitration  and  awarded  on  in  favour  of 
the  insured,  the  insurers  could  still  raise  the  question  of  fraud  (c). 

Issue  amounting  to  fraud. — An  agreement  making  settlement  of 
the  loss  in  a  certain  way  a  condition  precedent  to  the  bringing  of 
an  action  does  not  compel  the  party  to  submit  to  arbitration  the 
question  whether  or  not  the  policy  is  void  by  reason  of  misrepre- 
sentation as  to  the  condition  of  the  property  insured  (d). 

Poiril  of  law  not  to  be  referred. — Bacon,  V.  C.,  has  decided  that  the 
assured  is  not  bound  to  submit  a  legal  point  to  arbitration  before 
suing  (e). 

'  (x)  Identical  with  s.  11  of  the  Common  Law  Procedure  Act,  1854. 
(y)  Minifie  v.  Railway  Passengers^  Assurance  Co.,  44  L  T.  N.  S.  at  554. 
(2)  1  C.  B.  N.  S.  316. 

(a)  4  C.  B  N.  S.  569.    See  also  Willesford  v.  Watson,  8  Ch.  App.  478,  42  L. 
J.  Ch.  447,  28  L.  T.  N.  S.  428,  21  W.  R.  850. 
(6)  14  Ch.  D.  471  (1880),  at  p.  477,  49  L.  J.  Ch.  268. 
(c)  Hercules  Ins.  Co.  v.  Hunter,  16  C.  S.  C  (Ist  series)  800. 
Id)  Alexander  v.  Campbell,  41  L.  J.  Ch.  478,  27  L.  T.  N.  S.  26. 
(e)  Ibid. 

185 


\i\ 


■^^ 


:v 

^■t 

.  - ,     -If  ^. 

3       ■        ii; 

^;S;  i 


T'l 


t.  '. 


IMAGE  EVALUATION 
TEST  TARGET  (MT-3) 


'/, 


^ 


1.0 


1.1 


ItilM    12.9 

■^  122   |2.2 

2.0 


111 

lU 

u 


■  40 


I 


M  i^  i^ 

< 

6"     

^ 

Hiotographic 

^Sdences 

Corporation 


19  WMT  MAIN  ITMIT 

WIMTM,N.Y.  I4SM 

(7U)I79«4S03 


^%^ 

W\^ 

^ 


V 


,.<? 


.^ 


* 


^iio 


I 


i; 


''i 


^ 


. 


217 


THE  LAWS  OF  INSURANCE. 


The  right  to  have  the  matter  in  dispute  referred  to  arbitration 
mav,  like  other  provisions  in  favour  of  the  assured,  be  waived  (/). 

Waiv^  of  right  to  arbitration. — 1.  Payment  of  money  into  court  in 
an  action  commenced  on  the  policy  has  been  held  waiver  of  condi- 
tion precedent  as  to  deciding  disputes  by  arbitration  (gr). 

2.  Taking  possession  of  the  insured  property  for  purpose  of  re- 
pairs {h).  In  the  case  of  a  ship  this  would  be  acceptance  of  aban- 
donment; in  the  case  of  a  house  it  would  amount  to  election  to  rein- 
state. 

3.  Where  a  provision  is  made  for  reference,  the  action,  it  seems, 
may  be  maintained  i^  Ibd  itsurers  have  not  made  any  offer  to  refer 

or  have  simpi;  sfused  to  pay  at  all  (i)  (*) 
[*  217]  *N6  specific  prjc  '\ance  of  agreement  to  refer. — Specific  per- 
formance cannot  be  had  of  an  agreement  to  refer  ( j),  nor 
can  any  measure  of  da-nrage  for  breach  of  such  an  agreement  be 
easily  found,  except  by  a  i opting  the  suggestion  of  Lord  Eldon  (^'), 
that  the  agreement  shoaid  contain  the  mention  of  a  fixed  sutu  as 
agreed  and  liquidated  damages  for  any  attempt  by  either  party  to 
msregard  the  arbitration  clause,  and  agreements  to  refer  may  be  in- 
directly enforced  by  a  motion  to  stay  proceedings  until  reference 
had  under  s.  11  of  the  Common  Law  Procedure  Act,  1854  (/). 

Insurance  in  friendly  societies. — Where  an  insurnnce  is  made  with 
a  society,  under  tiie  Friendly  Societies  Act,  1875  (m),  disputes  be- 
tween a  member  or  a  person  claiming  through  (n)  a  member  (his 
heirs,  executors,  administrators,  or  nominees  where  nomination 
is  allowed),  or  claiming  under  the  rules  of  a  registered  friendly 
society,  and  the  society  or  an  officer  thereof,  must  be  decided 
in  the  manner  directed  by  the  rules  of  the  society,  and  the 
decision  so  made  is  binding  and  conclusive  on  all  parties  without 
appeal,  and  cannot  be  removed  into  any  Court  of  Law  or  restrained 
by  injunction.  Enforcement  thereof  may  be  had  through  the 
county  court.    The  Act  contains  further  provisions  as  follows : 

1.  Unless  the  rules  of  the  particular  society  forbid  it,  the  parties 
to  a  dispute  in  a  society  may  by  consent  refer  the  matter  in  dispute 
to  the  Chief  Registrar  or  the  Assistant  Registrar  of  Friendly  Socie- 
ties of  Ireland  or  Scotland. 


/)  Foxv.  Railway  Passengers'  Co.,  64  L.  J.  Q.  B.  505,  52  L.  T.  672. 


I'g)  Harrison  v.  Douglas,  8  A.  &  E.  800. 
(h)  Cobb  V.  N.  E.  it.  Marine,  72  Muss.  (0  Gray)  1»2. 
h)  Robinson  y.  Oeorge  Insurance  Co.,  17  Maine  13  .    Xillaudon  v.  Atlantic, 
8  Louisiana  0,  8.  658.    See  Fox  v.  Railwai/  Passengers'  Co  ,  supra. 
(j)  Mexborough  v.  Bower,!  Beav.  127,  per  Lord  Langdale. 
(ft)  Street  v.  Itigby,  0  Ves  815. 

it)  Ante,  p  208,  and  soo  Hodgson  v.  Railway  Passengers'  Co.,  I)  Q.  B.  D.  188. 
m)  38  k  80  Vict.  c.  60,  bh.  21,  22. 
n)  Altered  to  meet  tho  case  of  Kelsall  v:  Tyler,  25  L.  J  Ex.  153.    The  old 
Act  had  "  on  account  of." 

'  ReAisal  of  insurer  to  pay  any  sum  whatever  precludes  him  from  relying,  when 
sued,  on  clause  providing  for  arbitration  before  suit.     Weatem  H.  Jt  C.  In 
V.  I^ttnam,  20  Nob.  881 

186 


Jtu,  Co., 


ARBITRATION. 


*219 


2.  Where  the  rules  provide  for  a  reference  to  justices,  a 

court  of  summary  jurisdiction  is  to  decide  unless  the  *par-  [*  218] 
ties  choose  to  consent  to  go  to  the  county  court,  in  wliich 
case  that  Court  is  empowered  to  hear  and  determine  the  question 
in  dispute. 

3.  Where  the  rules  of  a  society  contain  no  direction  as  to  dis- 
putes, and  no  decision  on  a  dispute  is  given  within  forty  days  after 
application  by  the  society  for  a  reference  under  its  rules,  the  mem- 
bers or  person  aggrieved  may  apply  either  to  the  county  court  or  a 
court  of  summary  jurisdiction,  which  may  hear  and  determine  the 
matter  in  dispute. 

4.  Disputes  as  to  claims. — ^The  Court,  chief  or  other  registrar,  may 
at  the  request  of  either  party  state  a  case  for  the  opinion  of  the 
Supreme  Court  of  Judicature  on  any  question  of  law,  and  may 
also  grant  to  either  party  such  discovery  as  to  documents  and 
otherwise  or  such  inspection  of  documents  as  might  be  granted  by 
any  Court  of  Law  or  Equity,  such  discovery  to  be  made  on  behalf 
of  the  society  by  such  officer  of  the  same  as  such  Court  or  registrar 
may  determine. 

It  was  for  a  time  thought,  owing  to  the  punctuation  of  the  stat- 
ute, that  by  s.  30  the  member  of  any  friendly  society  whatsoever, 
or  person  claiming  through  him,  might,  notwithstanding  the  ruL^s 
of  the  societyj  apply  to  the  county  court  or  to  the  court  of  sum- 
mary jurisdiction  for  the  place  where  such  members  and  other  per- 
sons resided,  and  that  such  Court  might  settle  the  dispute  in  man- 
ner therein  provided  (o). 

Mode  of  declining  claims.  In  HolCs  Case  (v)  a.  claim  was  made 
by  the  representative  of  Thomas  Holt  for  £14  as  funeral  allowance. 
'the  society  resisted,  and  the  claimant  applied  to  the  magis- 
trate, though  the  rules  of  the  society  provided  for  *arbitra-  [*  219] 
tion.  The  Queen's  Bench  Division  held  that  he. was  en- 
titled to  do  so  under  s.  30,  sub-s.  10,  notwithstanding  the  provisions 
of  s.  22.  But  42  &  43  Vict.  c.  9,  was  immediately  passed,  declar- 
ing that  s.  30  applied  only  to  such  friendly  societies,  registered  or 
not,  and  industrial  insurance  companies  as  receive  contributions  by 
means  of  collectors  at  a  greater  distance  than  ten  miles  from  the 
registered  office  or  principal  place  of  business  of  the  society  or  com- 
pany. So  Holfs  dose  has  no  longer  any  force.  But  s.  22  is  so  far 
controlled  by  s.  30  that  members  or  persons  claiming  through  them, 
where  the  society  on  which  they  claim  receives  its  subscriptions 
through  collectors  and  collects  outside  a  radius  of  ten  miles  from  its 
head  office,  may  sue  in  their  domestic  forum  or  local  court  instead 
of  arbitrating.  In  these  oases  the  defendant  is  made  to  follow  the 
plaintiff. 

Arbitration  under  the  Railway  Passengers''  Assurance  Company's  Act. 
—By  the  Railway  Passengers' Assurance  Company's  Act,  1864  (27 


(' 


o)  Re  Alfred  Holt,  4  Q.  B.  D.  29. 
p)  4  Q.  B.  D.  29. 


187 


.r|vi! 

f;      r. 


{  '.* 


I' 


■1 


'if 


1 1 


^!l 


:^ii 


\  1 1\ 


ml 


220 


THE    LAWS  OF  INSURANCE. 


&  28  Vict.  c.  cxxv.),  the  company,  or  assured,  or  the  representa- 
tives of  the  assured,  may  require  any  question  or  difference  arising 
on  any  contract  of  insurance  entered  into  by  the  company  to  be  re- 
ferred to  arbitration  (ss.  3, 16),  and  if  the  assured,  or  his  legal  rep- 
resentatives, shall,  in  a  case  referable  to  arbitration  under  the  Act 
commence  an  action  against  the  company,  the  Court  or  a  judge' 
may,  upon  the  application  of  the  company,  stay  all  proceedings  in 
the  action  upon  being  satisfied  that  no  sufficient  reason  exists  why 
the  matters  cannot  be,  or  ought  not  to  be,  referred  to  arbitration 
and  that  the  company  were  at  the  time  of  the  bringing  of  the  action, 
and  still  are,  ready  and  willing  to  concur  in  all  acts  necessary  and 

G roper  for  causing  the  matters  to  be  decided  by  arbitration  (s.  33). 
nder  this  statute,  if  arbitration  is  required  bv  the  company  before 
action,  then  upon  an  action  being  commencea  the  company  might 
plead  their  demand  of  arbitration  as  an  answer  to  the  action, 
[*  220]  or  applj^  to  the  Court  to  stay  proceedings.  If,  *however, 
arbitration  is  not  required  by  the  company  before  action 
brought,  and  after  the  commencement  of  the  action  they  apply  for 
a  stay  of  proceedings  therein,  the  Court  can  only  grant  it  upon 
being  satisfied  as  provided  by  s.  83,  and  the  onus  of  bo  satisfying 
the  Court  rests  upon  the  company  (9). 

(9)  Fox  v.  Railway  Passengers^  Sc.,  Co.,  64  L.  J.  Q.  B.  605,  62  L.  T.  672. 


II I 


188 


INDEMNITY. 


*222 


♦CHAPTER  X. 


[*221] 


INDEMNITY. 


All  policies  on  property  eorUracts  of  indemnity.^-AW  policies  on 
property  are  contracts  of  indemnity,  and  the  law  will  not  permit 
them  to  be  otherwise  construed  (a).  It  is  auite  immaterial  what 
may  be  the  nature  of  the  property  or  risk  (6).  Valued  policies. — 
Even  in  the  case  of  valued  policies,  which  are  rare,  except  in 
marine  insurance,  the  interest  of  the  assured  must  be  proved 
(c).  And  the  valuation  only  dispenses  with  proof  of  the  amount 
of  such  interest  Valued  fire  policies  are  practically  unknown  in 
England  (d). 

Indemmty  is  against  loss  not  against  accident. — ^Insurance  is  a  con- 
tract of  indemnity,  not  against  accident,  but  against  loss  caused 
by  accident;  therefore,  if  a  policy  is  a  time  policy,  the  loss  and  not 
merely  the  accident,  must  accru'  within  the  time  covered  by  the 
policy  («).  Extent  of  indemnity. — Whilst  the  contract  is  one  of  in- 
demnity, it  is  a  contract  of  indemnity  onl}^  to  the  amount  whereon 
premium  has  been  paid.  The  indemnity  is  limited  to  the  amount 
named  in  the  l)olicy,  and  can  in  no  case  exceed  that.  This  is  the 
rule  as  to  specific  policies,  i.  e..  those  in  which  the  things  insured 
are  constant  and  not  variable  from  day  to  day,  as  in  the  case  of 
merchandise.  Such  policies  are  those  on  houses  and  buildings. 
Where  the  policy  is  made  subject  to  the  conditions  of  average,  and 
the  goods  at  risk  exceed  in  value  he  imount  insured  on 
goods  in  the  place  named,  the  risk  only  ^-attaches  to  goods  [♦  222] 
to  the  amount  of  such  value.  As  to  the  rest,  the  assured 
must  abate  his  claim  for  indemnity,  in  such  a  wav  that  on  the  set- 
tlement of  accounts  between  the  parties  he  shall  nave  borne  a  por- 
tion of  the  loss  proportionate  to  the  amount  by  which  he  was  at 
the  time  of  the  loss  under-insured. 

Indirect  damage  not  covered. — The  contract  to  indemnify  made  by 
a  policy  only  promises  indemnity  as  to  direct  damages.  No  dam- 
age indirectly  resulting  from  the  happening  of  the  event  insured 
against  can  be  recovered  for.    Thus  aamages  for  loss  of  business 

(a)  London  Aaaurance  v.  Sairuburv,  8  Doug.  245  ( 1786  ).  Ooaa  v.  WitherSf 
2  Burr.  688,  697  (17S8). 

(6)  Caatellain  v.  Pretton,  11  Q.  B.  D.  880,  62  L.  J.  Q.  B.  866,  40  L.  T.  N.  S. 
29,  81  W.  R.  667. 

ic)  Lewis  V.  Ruelcer.  2  Burr.  1170. 
d)  BiueU  v.  Boval  Exchange,  1  C.  S.  0.  (lat  leries)  174. 
«)  Per  Lord  Edier,  k  R.,  Hough  r.  Esad,  66  L.  J.  Q>  B.  48,  68  L.  T.  800, 
MW.B  IW. 

189 


''.!^; 


^    »l! 


■II 


Hi 


\\ 


*223 


THE  LAWS  OF  INSURANCE. 


cannot  be  recovered  under  a  policy  on  a  tavern  (/),  nor  for  want 
of  occupancy,  or  wages  paid  to  servants  thrown  out  of  work  by 
the  destruction  of  the  property  (g),  nor  under  an  accident  policy 
for  anything  but  the  expenses,  &c.,  attendant  thereon  (h).  Damage 
in  the  removal  of  furniture  or  by  fall  of  a  wall  injured  by  the  fire, 
or  by  water  used  in  putting  it  out,  has  been  held  direct  (i). 

Indemnity— market  value. — The  amount  of  the  indemnity  is  de- 
termined, not  by  the  cost,  but  by  the  value  at  the  date  of  the  loss 
of  that  which  is  insured.  By  value  is  meant  thS  intrinsic  or  mar- 
ket value  on  the  dav  of  the  fire  or  other  mishap  insured  against 
(j).  But  as  regards  houses  full  indemnity  to  a  tenant  or  person 
having  a  limited  occupying  interest  therein  seems  to  include,  not 
the  mere  market  value  of  such  interest,  but  the  pecuniary  value 

Slus  the  value  of  the  beneficial  enjoyment  (k).  In  such  case  in- 
emnity  is  best  attained  by  reinstatement.  The  assure'  more- 
over, cannot  under  a  policy  on  the  house,  recover  any  da.  ages  for 
loss  of  occupation,  or  the  rent  of  a  house  which  he  is 
[♦  223]  obliged  to  take  in  *consequence  of  the  fire.  Those  risks 
must  be  covered  by  a  special  insurance  on  rent  (/). 

A  policy  is  not  a  contract  of  perfect  indemnity  (m),  but  a  con- 
tract of  indemnity  against  losses  which  arise  out  of  a  specified  class 
of  accidents.  Particular  losses  may  be  selected,  and  the  assured  be 
guaranteed  against  them  only  (n).  Deduction.  New  for  old. — The 
indemnity  offered  is  also  limited  in  amount,  and  also  by  certain 
other  qualifications;  such  as,  for  instance,  the  marine  rule,  one-third 
new  for  old,  which  was  sprung  up  by  the  custom  of  trade,  and 
operates  in  some  cases  to  give  more  and  in  others  to  give  less  than 
complete  indemnity  (o). 

This  principle  has  in  Ireland  been  applied  to  fire  insurance ;  but 
it  was  said  by  Pennefather,  B.,  that  no  settled  rule  of  deduction,  one- 
third  or  one-fourth,  or  of  any  other  sum,  existed  in  the  case  of  old 
premises  or  property,  but  that  the  jury  might,  as  a  criterion  of  the 
actual  damage,  see  what  would  be  the  expense  of  placing  new  ma- 
chinery, such  as  was  in  the  premises  before  the  fire,  and  deduct 


if)  Waiahtv.  Pole,  Ik  &E.  621. 

ig)  Memics  v.  North  British,  9  C  8.  C.  (2nd  series)  694,  following  Wright  v. 
Pole. 

(h)  Theobald  v.  Railvoay  Passengers'  Assurance  Co.,  10  Ex.  46,  23  L.  J.  Ex. 
249,  18  Jur.  68a,  28  L.  T.  222,  2  W.  R.  528. 

(t)  Johnstone  v.  West  of  Scotland  Co,  7  C  S.  C  (Ist  series)  58,  66  n. 

( /)  Hcrcu'ts  Co.  V.  Hunter,  14  C  S.  C  (Ist  series)  1187,  15  C  8.  800. 

(«)  Castdlainv.  Preston,  11  Q  B.  D.  400,  per  Bowen,  L.  J.  See  note  (ft) 
stqtra, 

(I)  Buchanan  v.  Liverpool,  London,  and  Olobe,  11  C  8.  C.  (4th  series)  1033, 
21  So  L.  R.  696. 

(m)  Irving  v.  Manning,  1  H.  L  C  287,  807,  2  C  B.  784. 

(n)  Per  Bowen,  L  J.,  in  Hough  v.  Head,  65  L.  J.  Q.  I}.  48,  53,  L  T.  809,  84 

(o)  Aitchism  v.  LoAre,  4  App.  Cm.  766,  762,  49  L.  J.  Q.  B.  128,  41  L.  T.  N. 
8.  828,  20W.  R  1. 

190 


INDEMNITY. 


*225 


therefrom  the  difference  in  value  between  the  new  and  the  old  (p), 
Hince  the  cost  of  repairing  is  an  element  in  the  damage  sufifered  by 
the  assured  in  such  a  case.  Goods  and  furni*  ure,  especially  the  for- 
mer, can  of  course  be  replaced  without  other  appreciable 'expense 
than  their  cost,  but  macninery  and  the  like  required  fixing;  and 
getting  in  position,  and  sometimes  such  work  is  costly  and  like  re- 
building. 

Vance  v.  c^oster  (p)  was  a  decision  on  circuit,  and  no  case  seems 
to  have  come  before  the  full  courts.    It  is  clear  that  the  cus- 
tom to  fix  the  ratio  at  one-third  new  *for  old  is  not  estab- 1*  224] 
lished  as  to  fire  losses  on  land,  but  that  similar  computation 
is  necessary  to  prevent  over-compensation. 

Doctrine  of  abandonment  applicable  to  fire  insurance. — The  doctrine 
of  abandonment  intended  to  assist  the  principle  of  indemnity  seems 
applicable  not  only  to  marine  but  to  fire  insurance,  for  Brett,  L.  J., 
8aid(j)):  "I  concur  in  what  has  been  said  by  Lord  Blackburn 
(g),  that  abandonment  i&  not  peculiar  to  policies  of  marine  insur- 
ance ;  abandonment  is  part  of  every  contract  of  indemnity.  When- 
ever, therefore,  there  is  a  contract  of  indemnity  and  a  claim  under 
it  for  an  absolute  indemnity ^  there  must  bean  abandonment  on  the 
part  of  the  person  claiming  mdeoinity  of  all  his  right  in  respect  of 
that  for  which  he  receives  indemnity." 

Principle  of  abandonment. — Mr.  Marshall  thus  states  the  principle 
upon  which  the  right  of  abondoning  rests  (r) :  *'  The  assured  may 
abandon  in  every  case  where,  by  the  hai)pening  of  any  of  the  mis- 
fortunes or  perils  insured  against,  the  thing  insured  is  so  damaged 
and  spoiled,  or  the  charges  for  its  salvage  are  so  high,  that  the  costs 
of  repairing,  restoring,  or  recovering  it  would  exceed  its  marketable 
value  after  they  had  heen  assured,  or  where  the  assured  is  deprived 
of  the  free  disposal  of  it  under  circumstances  which  render  its  resti- 
tution uncertain." 

Why  doctrine  of  abandonm£nt  rardy  applied, — Probably  one  reason 
why  the  doctrine  of  abandonment  is  not  more  frequently  applied 
in  those  cases  whero  furniture  or  goods  are  insured  is  to  be  found 
in  the  nature  of  such  articles.  A  body  of  the  size  and  complex 
structure  of  a  ship  may  be  so  injured  as  to  be  useless  for  its  special 
practical  purposes  without  becoming  of  no  saleable  value; 
and  in  such  a  case  it  ""is  obviously  fair  that  such  value  [*  225] 
should  be  surrendered  to  the  insurer  when  he  pays  as  for  a 
total  loss.  But  such  things  as  goods  or  furniture  are,  when  con- 
sidered singly,  of  a  much  simpler,  smaller,  and  less  costly  character, 
and  many  of  them  are  usually  covered  by  one  policy.  Where, 
therefore,  a  part  is  injured  or  destroyed,  the  damaged  articles  are 

(p)  Fence  V  Foslery  Ir.  Circ  Rep.  47  (1841).  Herculeav.  Hunter,  14  C.  S. 
C.  (Ist  Denes)  1187,  15  do.  80C. 

(p)  Kaitenbach  v.  M'Kemie,  8  C.  P.  D.  467,  470,  88  L.  T.  N.  8.  948,  20  W. 
R.  844 

(a)  Rankin  v.  Potter,  L.  R.  6  H.  L.  88.  118.  42,  L.  J.  C.  P.  169,  39  L.  T.  K. 
S.  f42.  22  W  R.  1.    See  also  Maaon  v.  Saintburtfj  8  Doug.  68. 

(r)  Manhall  od  Iniuranoe,  4th  ed.  463. 

191 


1 
I 

h 


^n 


1 1 


>   *  ?f 

Mr   i| 


M 


t'Mt'i 


I   '        Hi  I 
^      '     WW, 


i"  I 


■  1 


tm 


*226 


THE  LAWS  OF  INSURANCE. 


•'li 


usually  paid  for  by  the  insurer.  The  value  of  the  injured  part  be- 
ing separate  and  distinct  from,  and  not,  as  in  the  case  of  a  siiip,  in- 
separably connected  with  the  injured  part,  a  full  and  fair  deduction 
in  respect  of  it  can  be  naade  from  the  amount  of  the  policy ;  and  the 
assured  is  in  no  degree  injured  by  having  to  retain  the  uninjured 
part  of  the  subject-matter  of  the  insurance. 

Usually  the  damaged  property  is  treated  as  salv^e,  and  sold  for 
-what  it  will  fetch,  the  sale  price  being  accounted  for  between  the 
parties. 

Principle  on  which  abandonment  rests  applies  to  insurance  of  chattels. 
— Whatever  may  be  the  difficulties  arising  in  this  branch  of  insur- 
ance law,' it  is  clear  that  the  principle  upon  which  abandonment 
rests,  viz.,  indemnity,  does  apply,  as  the  insurer  is  entitled  on  pay- 
ment to  all  ways  and  means  of  lessening  the  loss  (s),  though  the 
rule  as  to  notice  of  abandonment  in  claims  for  a  constructive  total 
loss  is  marine  only. 

Insurer  reinstating,  entitled  to  old  material. — ^Where  an  insurer  elects 
to  reinstate,  he  is  entitled  to  the  old  materials  left  hy  the  fire,  and 
in  any  case  he  will  seek  to  reduce  the  amount  of  his  indemnity  by 
deducting  their  value. 

Right  0/  insurer  in  subject  of  insurance  claim  by  after  assured. — When 
the  person  idemnified  [the  assured]  has  a  right  to  idemnity,  and 
has  elected  to  enforce  his  claim,  the  chance  of  any  benefit  from  an 
improvement  of  the  value  of  what  is  in  existence,  and  the  riik 
of  any  loss  from  its  deterioration,  are  transferred  from  the 
[*  226]  *person  indemnified  to  those  who  indemnify ;  and  therefore, 
if  the  state  of  things  is  such  that  steps  may  be  taken  to 
improve  the  value  of  what  remains,  or  to  preservd  it  from  further 
deterioration,  such  steps  from  the  moment  of  election  concern  the 
party  idemnifying,  who  ought,  therefore,  to  be  informed  promptly 
of  the  election  to  come  upon  him,  in  order  that  he  may,  if  he 
pleases,  take  steps  for  his  own  protection  "  ((). 

In  fire  insurance  this  is  effected  by  requiring  immediate  notice 
of  a  fire,  and  obtaining  licence  by  a  condition  in  the  policy  to  enter 
the  premises  insured  or  wherein  the  things  insured  are. 

Assured's  election  to  claim  for  partial  Um  irrevocable. — On  general 
principles  of  law  (not  confined  to  marine  insurance)  an  election 
once  aetermined  is  determined  forever,  and  such  a  determination 
is  made  by  any  act  that  shows  it  to  be  made.  And  therefore  any- 
thing which  indicates  that  the  person  indemnified  has  determined 
to  take  to  himself  the  chance  of  benefit  from  an  increased  value  in 
the  part  saved,  and  only  claim  for  the  partial  loss,  will  determine 
his  election  to  do  so  (u). 

(»)  Rankin  v.  Potter,  L.  R.  6  H.  L.  88  at  118,  42  L.  J.  C.  P.  109,  29  L.  T.  N. 
S  142,  22  W.  B.  1.  Kaltenbach  v.  JPl^msU,  8  C  P.  D.  467,  88  L.  T.  N.  S.  943, 
26W.R.844. 

it)  Per  Blackburn,  J^  Rankin  t.  Potter,  L.  R.  6  H.  L.  88,  119. 

(u)  Ibid.  And  see  Clouah  v.  London  and  North-  Western  Railway,  L.  B.  7 
Ex.  26,  84, 4t  L.  J.  Ex.  17,  26  L.  T.  N.  S.  708,  20  W.  R.  189.  MitcheU  v.  Edie, 
1  T.  B.  606,  explained  la  Roux  v.  Sahador,  8  Biog  N.  C.  266. 

192 


INDEMNITY. 


*228 


Valued  poliqf  mdemnity  to  amount  of  valwiiixm, — A  valued  policy 
is  a  Ciintract  of  indemnity  to  the  owner,  to  the  amount  at  which 
the  property  is  valued  in  the  policy.  The  assured,  if  he  has  re- 
ceived on  other,  policies,  can  only  ask  for  such  a  sum  as,  with  that 
already  leceived,  will  give  him  the  amount  which  the  insurers  by 
the  policy  sued  on  have  bargained  to  give  him.  The  amount  al- 
ready received  is  to  be  treated  as  salvage  received  by  the  owner 
niter  constructive  total  loss.  He  and  the  insurer  are  both  e8tt>pped 
from  denying  the  value  stated  in  the  policy  (x). 

*Iimirer  can't  require  party  primarUy  liable  to  be  sued  first.  [*  227] 
—The  insurer,  having  contrajcted  to  indemnify,  could  not 
insist  on  others  being  sued  first  who  were  primaiily  liable  (t^),  or 
on  consolidation  of  his  action  with  others  by  the  same  asiiured 
against  other  insurers  in  respect  of  the  same  loss  (s).  And  it  is  no 
defence  to  an  action  by  the  assured  against  the  party  causing  the 
damage,  that  the  assured  has  been  paid  by  his  insurers  (a). 

SubrogaUon,  what  it  ie. — Subrogation,  according  to  the  older  and 
narrower  view,  is  (he  treating  of  an  insurer,  who  has  paid  a  loss, 
for  which  some  other  person  is  primarilv  liable,  to  the  nssured,  as 
standing  in  the  place  of  the  assured  so  fur  vn  r^ards  his  rights  of 
action  against  such  persons.  This  view  of  the  subject  is  well  ex- 
pressed in  a  recent  American  case  by  the  following  definition : — 
"Subrogation  is  the  substitution  of  one  person  in  place  of  another, 
whether  as  a  creditor  or  as  the  possessor  of  any  other  rightful  claim, 
so  that  he  who  is  substituted  succeeds  to  the  rights  of  the  other  in 
relation  to  the  claim,  its  rightc,  remedies,  or  securities  "  (6).  Sub- 
rogation, (IS  constituting  part  of  the  law  of  indemnity,  includes  more 
than  the  mere  transference  to  the  insurer  of  existing  rights  of  action 
against  third  parties  vested  in  the  assured  in  respect  of  the  loss. 

Per  Lord  Edher. — Probably  the  best  and  most  mclusive  us  well  as 
the  most  recent  definition  of  subrogation  has  l)een  given  by  the 
present  Master  of  the  Rolls,  Lord  Esher,  in  OaMeUain  v.  PreeUjn  (c), 
asfoUows:— "  As  between  the  insurer  and  the  nssured,  the  insurer 
is  entitled  to  the  advantage  of  every  right  of  the  assured,  whether 
such  right  consists  in  contract  fulfilled  or  unfulfilled,  or  in 
remedy  for  tort  capable  of  being  insisted  upon,  or  ^already  [*  228] 
insisted  on,  or  in  any  other  right,  whether  by  way  of  con- 
dition or  otherwise,  which  can  bo  or  has  been  oxercisetl  or  has  ac- 
crued ;  and  whether  such  ripht  could  or  could  not  be  enforced  by 
the  insurer  in  the  name  of  the  nssured,  by  the  <  xercise  or  acquir- 
ing of  which  right  or  condition  the  ]oss  ngainvt  which  the  nssured 

(x)  Jirur.9  V,  Jonea,  82  L.  J.  Ex.  133,  7  L.  T.  N.  S.  748,  0  Jur.  N.  S.  628,  11 
W.R.  871. 

(y)  Dicket^H  v.  JardiMy  10  W.  R.  1109, 18  L.  T.  N.  S.  717,  L.  R.  8  C.  P. 
639. 

(«)  M'Ortgor  v.  Ilor^faU,  8  M.  &  W.  820 

(a)  Pi'opeUor  JltoiUieMo  v.  HoUiam,  17  Ilowurd  (U.  S)  152.  rain  v.  Whik, 
4Bmg.  N  C.372. 

(b)  J(tckson  V.  Bojfhton  Co .  130,  Maiw.  filO. 

(c)  11  Q.  B.  D.  881,  886,  OJ  L.  J.  Q.  B.  86a.  40  L.  T.  N.  S.  29,  81  W.  R.  887. 

13  PORTBR  ON  INSUIUMCB.  198 


1 


■  'f 


( 


r 


'.mm 


■■\A 


*229 


THE  LAWS  OF  INSURANCE. 


is  insured  can  be  or  has  been  diminishe*!.    That  seems  to  put  this 


ought  to  have  been  stated  "  (eO« 

As  to  anything  not  within  the  definition,  the  general  law  of  in- 
demnity  must  be  looked  at(g),  and  this  definition  is  consonant  with 
the  view  of  Lord  Blackburn  (/),  who  states  the  principle  8t)mewhat 
more  briefly  and  generally ;  and  substantially  the  same  view  has 
been  expressed  by  the  Supreme  Court  of  the  United  States  (g). 

The  right  of  the  insurer,  however,  to  the  advantage  of  every  right 
of  the  assured  must,  it  seems,  be  understood  with  this  limitation, 
viz.,  that  the  right  must  be  incident  or  attached  to  the  owner-hip 
of  the  thing  insured ;  e.  g.,  freight  to  be  earned  under  a  charter- 
party  is  not  an  incident  to  the  ownership  of  the  vessel,  and  there- 
fore, although  an  underwriter  of  a  policy  of  insurance  upon  a  ves- 
sel becomes,  by  abandonment  to  him  upon  a  constructive  total  loss 
happening  through  the  fault  of  another  vessel,  entitled,  after  pay- 
ment of  the  sum  secured  by  the  policy,  to  everv  benefit  accruing 
from  the  ownership  of  the  insured  vessel,  he  cannot  claim 
[*  229]  any  part  of  the  damages  recovered  from  the  *owner8  of 
the  wrongdoing  vessel  on  account  of  loss  of  freight  in- 
tended to  be  earned  by  the  insured  vessel  (g). 

Payment  of  loss  by  insurer  no  defence  in  action  by  assured  against 
person  causing  has.  Subrogated  insurer's  right  to  damages  recoverable 
by  assured.— The  mere  payment  of  a  loss  bv  the  insurer  does  not 
afibrd  an^  defence  to  a  person  whose  fault  has  been  the  cause  of 
the  loss  m  an  action  brought  against  the  latter  by  the  assured. 
But  the  insurer  acquires  by  such  payment  a  corresponding  right 
in  any  damages  recoverable  by  the  assured  against  the  wrongdoer 
or  other  party  responsible  for  the  loss  (h).  If  the  insurer  has  in 
fact  paid,  the  tortfeasor  cannot  object  that  he  ptiid  without  liability 
(t),  nor  can  the  wrongdoer  limit  the  amour. u  payable  by  him  to 
that  for  which  the  assured  has  settled  with  the  insurer  (j).  This 
right  rests  upon  the  ground  that  the  insurer's  contract  is  in  the  na- 


i: 


(d)  Same  case,  886. 

(e)  Same  case,  404,  per  Bowen,  L.  J. 
(/)  Bumand  v.  Rodocanchi,  7  App.  Cas.  {(88,  839,  31  W.  R.  65,  61  L.  J.  Q. 

B,548,  47L  T.  N.  S.  277. 

(g)  Phoenix  Co.  v.  Erie  Co.,  117  U.  S.  (10  Davia)  820. 

(g)  The  Sea  Insurance  Co.  v.  Hadden,  13  Q.  B.  D.  706,  58  L.J.  Q.  B.  252,  50 
L.  T.  657,  82  W.  R.  841. 

(h)  Randall  v.  Cochran,  1  Ves.  Sen.  98.  Maaon  v.  Sainsbury,  3  Doug.  Cl. 
London  Assurance  v.  Sainsbury,  8  Doug.  246.  Clark  y.  Blything,  2  B  a.  C. 
254.  Bradbum  v.  Grtat  Western  Railway,  Lr  10  Ex.  1,  44  L  J.  Ex.  0,  81  L. 
T  N.  S.  464,  28  W.  R.  48.  Yates  v.  White,  4  Bing.  N.  C.  288.  The  Potomac, 
103  U.  S  (15  Otto)  680,  per  Gray,  J.  Smidmore  v.  Australian  Gaslight  Co.,  2 
N.  S.  W.  Law  210. 

(»)  Sun  Mutual  Co  v.  Mississippi  Co.,  6  McCrary  (U.  S.  Circ  Ct.)  477.  Ini. 
Co.  V.  C.  D.  Junr..  1  Woods  ( U.  S.  Circ.  Ct)  72 

ij)  Mobile  Railwan/  Co.  v.  Jurey,  111  U.  S.  (4  DaviB)  584. 

194 


INDEMNIIT. 


*230 


tare  of  a  contract  of  indemnity,  and  that  he  is  therefore  entitled, 
upon  paying  a  sum  for  which  others  nre  primarily  liable  to  the 
assured,  to  be  proportionably  subrogated  to  the  right  of  action  of 
the  assured  against  them.  Jf  insurers  assign  their  mbrogated  right  to 
perwti  causing  loss,  it  may  be  defence  in  assured' s  actum  against  him. — 
The  amount  which,  by  the  eflect  of  the  contract  of  insurance,  and 
of  the  payment  of  a  loss  under  it,  the  insurers  would  have  a  right 
to  recover  to  their  own  use  from  the  person  whose  fault  was  the 
cause  of  the  loss,  the  insurers  would  have  the  right  to  release  and 
assign  to  such  person,  who  would  then  have  a  claim  to  a  deduction 
on  this  account  from  the  damages  to  be  recovered  a^rainst  him  by 
the  assured.  This  claim  to  a  deduction  does  not  arise  out  of  any 
right  inherent  in  such  person,  but  out  of  the  right  so  derived  from 
the  insurers  (k). 

*Policy  vxithmt  ben^  of  salvage  iUegal. — The  law  is  so  [*  230] 
stringent  as  to  the  principle  of  indemnity,  that  policies  with- 
out benefit  of  salvage  are  in  express  terms  made  illegal  {k).  As 
the  doctrine  of  abandonment  is  seldom  applied  to  any  but  marine 
risks,  questions  of  salvage  do  not  ariseao  often  in  fire  policies.  But 
the  amount  of  salvage  is  always  an  element  in  the  computation  of 
damages  by  fire,  except  where  the  insurers  elect  to  take  the  salvage 
and  pay  in  full,  reimbursing  themselves  so  far  as  they  can  by  selling 
the  salvage  for  what  it  will  fetch. 

Position,  of  insurer  as  to  salvage  and  dmnage. — Generally  speaking, 
as  to  salvage  the  insurer  stands  in  the  place  of  the  assured,  and 
can  claim  all  that  is  saved ;  and  as  to  damage,  the  insurer  is  en- 
titled to  use  and  exercise  the  ways  and  means  open  to  the  assured 
for  diminishing  the  loss  and  obtaining  compensation  (/). 

Defences  against  assured  good  against  subrogated  insurer, — An  in- 
surer suing  the  party  through  whose  fault  the  loss  occurred  can 
only  assert  the  right  of  the  assured,  and  will  be  subject  to  any  de- 
fences or  equities  which  would  be  good  against  him  (m).  The  in- 
surer stimds  in  no  relation  of  contract  or  privity  with  such  a  party. 
His  title  arises  out  of  the  contract  of  msurance,  and  is  derived 
from  the  assured  alone,  and  can  only  be  enforced  in  right  of  the 
latter  (n).  Thus  where  damage  occurred  through  contributory 
negligence,  that  defence  would  be  an  answer  to  the  action  of  the 
subrogated  insurer.  Again,  if  two  ships  of  the  same  owner  col- 
lided by  the  fault  of  one  to  the  destruction  of  the  other,  the  insur- 
ers could  not  puc  the  owner,  since  they  claim  under  him  (o). 

Insurer  entitled  to  subrogation  against  carrier, — As  between  carrier 
and  insurer  the  liability  to  the  owner  of  the  goods  carried  and  in- 
sured is  primarily  on  the  carrier,  and  the  insurers,  when  they  have 

{k)  The  Potomac,  vhi  xvpra. 

(A)  AUkina  v.  Jupe,  '2V.  P.  D.  875,  46  L.  J.  C  P.  824,  80  L.  T.  N.  S  851. 
(/)  Handall  v.  Curkran,  1  Vcs.  Sen.  98.     London  Assurance  v.  Hainabury,  8 
Doug  245,  268.     Castellaia  v.  Preston,  ubi  mpra. 
(m)  Phnanix  Co.  v.  Erie  Co.,  117  U.  S.  (10  Davis)  312. 
in)  Ibid,  821. 
(o)  ISimpson  v.  Thompson,  8  App.  Cas.  279,  88  L.  T.  N.  S.  1. 

196 


III 


i'M4 


ml 


mm, 

■   ■■     ■    ■-.  !'.'l?f 


m 


*232 


THE  LAWS  OF  INSURANCE. 


[*  231]  *indemnified  the  assured,  are  equitably  entitled  to  succeed 
to  the  right  which  he  had  against  the  carrier.  The  owner, 
however,  may  make  the  contract  of  carriage  to  suit  his  own  inter- 
est, and  may  release  the  carrier  from  all  liability,  but  such  release 
or  the  intention  to  grant  it,  must  be  disclosed  to  the  insurer  if  it  be 
a  material  fact  which  the  assured  knew,  or  should  have  kncmn, 
would  aflFect  the  premium  or  the  willingness  of  the  insurers  to  take 
the  risk  (n).  It  has  been  held  in  America  that  a  bargain  by  the 
carrier  to  have  the  benefit  of  any  insurance  on  goods  entrusted  to 
him  will  not  avoid  a  policy  eflPected  without  disclosing  such  bar- 
gain (o),  and  in  one  case  the  insurers  were  held  to  have  notice  of  a 
bill  of  lading  containing  a  proviso  to  the  above  eflFect  (p).  But 
these  cases  do  not  seem  correctly  to  apply  the  rule  indicated  above 
and  laid  down  in  Tate  v.  Hyalop.  It  goods  are  insured  during 
transport,  it  must  be  material  to  the  insurer  to  know  the  nature  of 
the  contract  of  carriage,  and  whether  it  contains  any  variation 
from  the  ordinary  liabilities  imposed  by  law  on  carriers,  or  in  fact 
undertaken  by  them ;  and  f  irther,  even  if  a  carrier  can  contract 
himself  out  of  any  liability  for  loss  of  goods  entrusted  to  him,  this 
is  a  diflferent  thing  from  bargaining  to  have  the  benefit  of  any  in- 
surance effected  by  the  owner.  The  latter  bargain  does  not 
amount  to  a  contract  by  the  owner  to  insure,  but  an  undertaking 
that  if  he  does  so  he  will  release  his  rights  against  the  carrier. 
And  such  a  bargain  would,  in  an  ordinary  case,  be  a  fraud  on  the 
insurer,  unless  it  can  be  said  that  he  has  notice  of  the  contract  of 
carriage,  since  it  is  directly  aimed  at  defeating  the  insurer's  subro- 
gation (q). 
[*  232]  '^Re-insurer. — Re-insurers  in  America,  on  payment  of  their 
proportion  of  a  loss,  have  been  allowed  to  sue  in  Admiralty 
against  the  carrier  of  the  goods  injured.  The  question  in  any  case 
seems  to  be  merely  one  of  procedure,  as  a  re-insurer  is  clearly  sub- 
rogated to  the  insurer's  nghts,  and  so  to  those  of  the  assured  (7) 
and  any  salvage  or  benefit  thereof  (r). 

Partial  insurance  and  third  person  primarily  liable. — A  person  par- 
tially insured  can  also  sue  any  party  primurilv  liable  tor  the  loss. 
Such  party  may  not  profit  by  the  insurance.  But  the  assured  will 
recover  (as  to  the  balance  in  excess  of  indemnity)  as  trustee  for 
the  insurer  (»). 


(n)  Tate  v.  Hyslop,  15  Q.  B.  D.  868  at  877,  54  L.  J.  Q.  B.  55)2,  53  L.  T.  581. 

(0)  Phcenix  Co.  v.  Erie  Co  ,  117  U.  S.  (10  Dbtis)  812.  Jackson  Co.  v.  Boylston 
Co.,  52  Am.  Rep.  728,  139  Mass.  608. 

ip)  British  and  Foreign  Marine  Co.  v.  (hdf  Railway/Co..  51  Am.  Rep.  6fil. 
And  see  Rintoul  v.  New  York  Central  Railway  Co.,  21  Blatcn.  (U.  8.  Circ.  Ct.) 
448. 

(g)  Defoureet  v.  Biahop,  18  Q.  B.  D.  at  378-879.       • 
Iq)  The  Ocean  Wave,  5  Bissell  (C  Ct.  U.  8.)  878. 
(r)  Delaware  Co.  v.  Quaker  City  Co.,  8  Orant  (Penn.)  71. 
(s)  See  IFally.  Railroad  Co.,  13  Wall  (U.  S  )  867,  and  casea  there  collected. 
Commercial  Union  v.  Lister,  ii^fra,  note  (y). 

190 


INDEMNITY. 


*233 


Negligence  of  servants,  or  municipal  authorities.  Collision. — If  a  fire 
is  caused  by  the  negligence  of  servants  of  a  railway  or  steamer  («), 
the  insurers  are  entitled  to  subrogation.  So  also  in  case  of  negli- 
gence by  municipal  authorities  (u).  So  also  for  damage  by  col- 
lision between  river  steamers  (x). 

Where  insurance  is  less  tfian  damage,  assured  is  dominus  litis  against 
vfrmg  doer. — Where  the  amount  insured  and  paid  is  less  than  the 
the  value  of  the  subject-matter  of  the  insurance  or  the  damage 
done  thereto,  in  an  action  against  the  person  responsible  for  the 
damage  the  assured  would  be  the  dominus  litis,  and  not  obliged  to 
lend  his  name  to  the  insurers  for  the  purpose  of  proceedin;.:a  by 

them. 

Assured  must  not  prejudccc  inswrer^s  rights. — In  such  a  case  the 
assured  should  sue  for  the  whole  damage,  and  not  release  the  action 
coUusively  or  compromise  it  in  any  way  injuriously  to  the  insurers, 
and  he  will  be  accountable  for  the  proceeds  of  such  action 
so  far  as  they  with  the  insurance  exceed  *complete  indem-  [*  233] 
nity,  and  he  will  be  liable  for  anything  done  in  violation  of 
his  equitable  duty  to  the  insurers  (y). 

Assured  cannot  d^eai  the  insiirer^s  right  to  subrogation  or  to  use  cw- 
gured'sname. — In  tlie  Australian  case  oiSmidmore  v.  Australian  Gas- 
light Company,  the  insured  property  was  injured  bv  an  explosion  of 
gas  due  to  the  defendant's  negligence.  The  assured ,  in  consideration 
of  compensation  for  such  of  the  damage  as  was  not  covered  by  insur- 
ance, gave  to  the  defendants  an  absolute  release  from  all  claims  of 
him  (the  assured)  on  the  defendants,  and  covenanted  not  to  let  any 
one  use  his  name  in  bringing  any  action  against  the  defendants  in 
respect  of  the  said  damage.  It  was  held  that  the  insurer,  having 
paid,  could  sue  in  the  assured's  name,  whether  he  liked  it  or  not, 
and  that  the  release  applied  only  to  the  uninsured  part  of  the  loss, 
that  alone  being  mentioned  in  the  recitals  (z).  This  view  seems  to 
be  in  accordance  with  the  English  law  (a)  and  with  principle,  for 
to  make  such  a  bargain  after  loss  is  to  make  away  with  the  salvage 
in  derogation  of  the  duty  of  "  utmost  good  faith."  Though  it  may 
not  be  necessary  to  disclose  matters  likely  to  affect  the  amount  of 
salvage  before  loss  (b),  yet,  after  loss,  the  assured  must  not  inter- 
fere with  the  salvage  in  manner  prejudicial  to  the  insurer. 

No  defence  to  insurers  that  other  parties  first  liable. — Tlie  insurers  can 

(0  Quebec  Fire  v.  St.  Louis,  7  Moore  P.  C.  286,  1  Lr.  Can.  Rep.  223. 

(u)  Iteesor  v.  Provincial  Insurance  Co.,  33  U  C  (  Q  B  )  357  Commercial 
Union  v.  Lister,  9  Ch.  App.  483,  43  L.  J  Ch.  «0I.  Darrell  v.  Tibbits,  5  Q.  B. 
D.  500,  50  L.  J.  Q.  B.  83  42  L.  T.  N.  S.  797,  29  VV.  11.  6«. 

(x)  The  Potomac,  105  U  S.  (16  Otto)  630. 

(y)  London  Assurance  v.  Sainsburt/,  3  Dong.  245,  per  Wiles,  J.  Smidmore 
V.  Amtralian  Gaslight  Co  ,  2  N.  S.  W.  Iiaw  219.  Commercial  Union  v.  Lister, 
9  Ch.  App.  483,  4a  L.  J.  Ch.  601.  Simpson  v.  Thompson,  3  App.  Cas.  279,  293, 
88  L.  T.  N  S.  1. 

(z)  Smidmore  v.  Australian  Gaslight  Co  ,  2  N.  S.  W.  Law    '9. 

(o)  Dvfourcet  v.  Bishop,  18  Q.  B.  D.  878. 

(b)  Tatt  V.  Hyalop,  16  Q.  B.  D.  868,  64  L.  J.  Q.  B.  592,  68  L.  T  681. 

197 


'W 


I'd 


^m 


*235 


THE  LAWS  OF   INSURANCE. 


H 


not  plead  as  a  defence  to  an  action  against  them  that  (/her  parties 
not  insurers,  are  first  liable  and  should  be  first  sued  (c).  In  this 
respect  they  are  like  sureties,  and,  having  un<lertaken  to  imleinnify 
against  the  loss  of  the  thing  insured,  they  cannot  escape 
[*  234]  from  the  performance  of  thei'^  *undertaking  by  showing  the 
cause  of  its  loss  to  be  the  fault  of  a  third  person. 

Money  received  by  assured  after  payment  by  insurers,  enures  to  their 
benefit.— 1(  the  assured,  after  payment  by  the  insurers,  obtains  by 
action  (or  otherwise  than  by  special  gift  not  intended  to  be  by  way 
of  indemnity  (6) ),  any  money  (or  other  indemnity  which  has  a 
money  equivalent  (c) )  which  together  with  the  sura  received  from 
the  insurers  exceeds  the  total  value  of  the  property  insured,  the  in- 
surer will  be  entitled  to  recover  from  the  assured  the  amount  of 
such  surplus  (d). 

Principle  of  indemnity  explained  on  insurance  by  mortgagee. — The 

Erinciple  laid  down  in  Darell  v.  Tihbitta  was  asserted  in  1859  in 
ower  Canada  in  what  seemed  a  case  of  first  impression  (e),  the 
facts  of  which  were  as  follow: — 

A  man  sold  land  and  took  a  mortgage  in  lieu  of  cash  from  the 
purchaser,  with  an  undertaking  to  build  and  insure  as  a  security. 
He  insured  his  mortgage  interest  at  £600.  The  buildings  were 
'  erected, insured,  and  burnt;  but,  before  the  mortgagee  brought  \m 
action,  the  purchaser  reinstated  (/).  The  Court  refused  to  allow 
the  mortgagee  to  recover  on  his  policy,  and  laid  down  the  law  as 
follows : — 

1.  The  contract  of  insurance  being  a  contract  of  indemnity,  it  is 
the  actual  loss  alone  which  can  be  the  basis  of  computation  under 
the  contract,  and  the  loss  must  be  determined  by  the  actual  state 
of  the  case  at  the  time  of  action  brought  (g). 

2.  The  insurance  in  the  case  of  a  mortgagee  insuring  the 
[*  235]  house  or  corpus  on  which  the  mortgage  rests,  and  *in  the 
possession  of  the  mortgagor  or  owner  thereof  at  the  time 
of  effecting  the  insurance,  is  a  special  insurance  of  the  mortgagee's 
interest  in  the  thing  insured,  and  is  limited  to  the  interest  specitied 
in  the  policy  itself  (h). 

3.  The  special  interest  thus  insured  by  the  mortgagee  is  not  the 
safety  of  the  whole  property  insured,  but  only  so  much  of  it  ad 
may  be  necessary  to  cover  his  mortgage  debt. 


(c)  Dickinson  v.  Jardine,  L  R.  8  C.  P.  fiSO,  18  L.  T.  N.  S.  717,  Irt  W.  R  1169. 
(6)  linruawlv   limiocanachi ,  7  Apn.  Cus.  883,  61  L.  J.  Q    B.  548,  47  L.  T. 
N.  S  277  81  W.  R  fto  i-i  7  -»  I 

\c)  Dartell  v.  Tibbits,  5  Q.  R.  1).  COO,  50  L  J.  Q.  R.  88,  42  L.  T.  N.  S.  797, 
29  W.  R.  fi6. 

(rf)  Castellain  v.  Preston,  11  Q  B.  D.  380,52  L.  J.  Q.  B.  8(50,  40  Ij.  T.  N.  S. 
29,  81  W.  R.  567. 

(e)  Matthewson  v.  Western,  4  Lr.  Can.  Jur.  67,  10  Lr.  Can.  Rep.  8. 

(/)  See  Hamilton  v.  Mendes,  2  Burr.  1198. 

(a)  Parson  Merc  Law  609. 

(n)  Matthtwsan  v.  Westent,  4  Lr.  Can.  Jur.  57,  10  Lr.  Can.  Rep.  8. 

198 


INDEMNITY. 


*236 


4.  In  the  present  instance  the  constitut  or  charge  was  insured  to 
the  extent  of  £400  on  the  buildings  erected  on  the  land  sold,  as  a 
security  for  the  payment  of  the  constitut,  is  amply  covered  and  pro- 
tected by  the  value  of  the  buildings,  erected  oy  the  debtor  of  the 
constitution  the  land  after  the  fire  had  occurred  and  before  action 
brought, ''  so  that  the  security  of  the  plaintiff  is  not  in  any  way 
impaired  or  diminished,  and  consequently  no  loss  in  fact  has  been 
sustained." 

Whilst  the  mortgagor  is  not  entitled  to  the  benefit  of  the  mort- 
gagee's contract,  the  mortgagee  is  not  entitlea  to  be  indemnified 
from  two  quarters  (t): 

Sabrogatitm  of  insurer  to  mortgagee's  rights. — Subrogation  by  an  in- 
surer to  the  rights  of  a  mortgagee  has  been  doubted  in  Canada  ( j), 
])Ut  in  this  case  the  insurance  was  in  effect  the  mortgagor's,  being 
at  his  costs  and  charges,  and  on  his  interest. 

Wilson,  J.,  there  well  said :  *'  The  question  can  only  aripe  when 
the  mortgagee  of  his  own  motion,  and  at  his  own  risk  and  expense 
and  for  his  sole  benefit,  makes  the  insurance,  and  when  the  insur- 
ance-money is  as  greai  as  or  greater  than  the  debt.  If  the  debt  is 
greater,  the  insurers  can  never  claim  more  than  %  right  to 
participate  in  the  debt  to  the  amount  greater  than  or  *equal  [*  236] 
to  the  msurance-money,"  And  the  difficulties  and  solu- 
tion here  suggested  have  presented  themselves  to  our  Courts  (k). 
In  Castellain  v.  Preston,  the  Court,  pressed  by  the  difficulties  as  to 
specific  performance,  refrained  (though  by  a  majority  so  inclined) 
from  laying  it  down  as  law  that  an  insurer  who  lias  to  pay  (I)  the 
assured  (an  unpaid  vendor),  still  in  possession  of  the  property  in- 
sured, and  having  a  lien  thereon  for  the  purchase-money  enforce- 
able notwithstanding  the  fire,  would  be  entitled  to  enforce  that 
lien  against  the  purchaser.  In  that  case  the  insurer  got  back  the 
insurance  money  on  the  ground  that  the  insured  had  been  doubly 
indemnified,  for  be  had  not  only  obtained  the  insurance  money, 
but  enforced  his  vendor's  lien. 

Ill  Canada  mortgagee  paid  by  insurer  canH  recover  from  mortgagor. — 
Still,  in  a  somewhat  recent  Lower  Canada  case  the  Courts  have 
held  that  a  mortgagee  who  has  insured  property  and  received  the 
value  from  an  insurer  cannot  recover  from  a  mortgagor  (after  he 
has  been  paid  by  the  insurer)  on  the  principle  of  the  civil  law : 
"  Bona  fides  non  patitur  ut  bis  idem  exigatur  "  (m).  Securities  in 
England. — The  English  law  would  let  him  recover  where  he  paid 
the  premiums  out  of  his  own  pocket  under  circumstances  which 


;':-;!  iil  iil 


Ominum  Co.  v. 
Canada 


(t)  But  SCO  Levy  v.  Merchants  Co.,  6'i  L.  T.  26  <. 

(./)  Iteemr  v.   h'ovinrial,  <tc.,  Co  ,  m  V.  C.  ( Q.  P  ^  857. 
Canada  las.  Co.  I  Ontario  494. 

(k)  Jteesar  v.  Provincial  Co.,  88  U,  C.  (Q.  B.)  857.     Ominum  Co.  v 
Insurance  Co.,  1  Ontario  494. 

(I)  Collingridge  v,  lioi/al  Exchange,  3  Q.  B.  I).  173,  47  L.  J  Q.  B.  82,  37  L. 
T.N.  8.526,  20  W.Ra  12. 

(m)  Archambault  v.  La  Mere,  20  Lr.  Can.  Jur.  230  (1882). 

199 


.,tUi 

ill '11 

.i  ! 


*238 


THE  LAWS  OF  INSURANCE. 


liii 


J 


did  not  entitle  him  to  charge  them  to  the  mortgagor,  but  he  would 
so  recover  for  the  benefit  of  the  insurers,  who  are  entitled  on  pay- 
ment  to  be  subrogated  to  his  rights  (n)  inde|)endently  of  stipula- 
tion  to  that  effect,  though  such  a  term  is  contained  in  some  Ameri- 
can policies  (o). 

The  Canadian  decision  went  on  bona  fides,  but,  while  it  prevents 

the  mortgage  from  taking  with  both  hands,  it  gives  the 

[*  237]  mortgagor  the  benefit  of  a  security  for  *which,  ex  h/potheH 

he  did  not  and  could  not  be  made  liable  to  pay,  and  goes 

counter  to  the  rulirifg  principle  of  insurance,  indeinnity  (p). 

Conditim  in  policy  Jor  mbrogation. — Sometimes  insurers  contract 
for  subrogation,  as  in  a  recent  American  case  before  the  Supreme 
Court,  where  a  vessel  was  valued  at  $75,000,  and  insured  in  all  at 
$50,000  by  several  insurers.  The  valuation  was  specified  in  each 
policy,  and  each  policy  also  contained  this  provision: — "  Whenever 
this  company  shall  pav  any  loss,  the  assured  agrees  to  assign  over 
to  the  said  company  all  right  to  recover  satisfaction  therefor  from 
any  other  person  or  person,  town  or  corporation,  or  the  United 
States  Government,  or  to  prosecute  therefor  at  the  charge  and  for 
the  account  of  the  company  if  requested,  and  the  said  company 
shall  be  entitled  to  such  proportion  of  the  said  damages  recovered 
as  the  amount  insured  by  them  bears  to  the  valuation  of  the  said 
vessel." 

Assignment  by  insurers  to  torlfeasor  of  s^ogated  rights  is  a  defence.— 
A  collision  occurred,  the  insurers  paid  the  assured  their  proportion 
of  the  loss,  and  assigned  over  to  the  owners  of  the  ship  to  blame  all 
their  right  to  any  damage  arising  out  of  the  collision.  The  owners 
of  the  injnred  vessel  brought  their  action  for  the  damage,  and  the 
as8i|p;nment  of  the  insurers'  rights  was  pleaded  in  defence. 

The  United  States  Supreme  Court  held — 

1.  That  the  insurers  nad  no  right  to  more  than  two-thirds  of 
the  damages  recovered. 

2.  That  the  plaintiflF  having  been  equally  in  fault,  only  half 
damages  oould  t>e  recovered,  and  that  of  that  half  only  two-thirds 

could  be  set  off  under  the  assignment  ((/) 
[*  238]     ^Extent  of  insurers'  claim  by  subrogation  where  policy  valued 

and  where  not. — Insurers  are  only  entitled  to  dnmuges  for  an 
injury  for  which  they  have  paid,  and  to  such  proportion  only  of 
those  damages  as  the  amount  insured  bears  to  tne  valuation  in  the 
policies  (r);  if  they  be  valued  policies,  in  which  case  the  insured  is 
estopped  from  setting  up  any  other  standard  of  valuation  agnintit 


(n)  Burton  v.  Gore  District  Mntnnl,  12  Grant  (IJ    C.)  16fi.     Casielhn'n  v. 
Pi'eston,  11  Q.  B.  D.  3F0,  H2  L.  J.  Q.  B  800,  41)  L.  T.  N.  8.  2!>,  «1  W.  U,  557. 

(o)  New  England  Fire,  Ac  ,  Co.  v.  Wetmore,  82  Ulinois  2C1. 

( »)  8oc  per  James,  L.  J.  in  Rayner  v.  Preston,  18  Ch.  D.  1,  50  L.  J.  Ch.  472, 
44  L.  T.  N.  8.  787,  29  W.  11.  647. 

(q)  The  Potomac,  105  U.  S.  (15  Otto)  080.  , 

(r)  The  Ihtomac,  supra. 

200 


INDEMNITY. 


239 


the  insurers  («) ;  or  if  they  be  not  valued,  which  is  a  similar  case, 
only  to  the  extent  of  the  indemnity  paid  by  them. 

if  the  assured  only  gets  half  his  damage  as  in  collision,  the  in- 
surer, who  has  insured  two-thirds  of  the  whole  valuo,  will  only  get 
one-third  of  the  damage  awarded,  as  by  his  contract  he  was  liable 
for  two  thirds  of  the  whole,nottwothirdsof  half  the  damage  (<). 

CorUribviion  occurs  when  same  interest  insured  by  different  insurers.^ 
Contribution  takes  place  where  different  insurers  insure  the  same 
interest  in  respect  of  the  same  property  and  the  same  perils  (u). 
The  conditions  in  a  fire  policy  aim  at  increasing  the  occasions  for 
contribution. 

And  insurers  often  stipulate  that  the  assured  shall  furnish  the 
names  of  other  offices  witn  which  he  has  policies,  in  order  that  they 
may  have  the  proposals  the  same  as  those  other  companies,  so  that 
policies  may  be  in  similar  terms  and  contribution  facilitated  (x). 

Insurers'  liability  Joint  and  several — The  assured  may,  but  is  not 
bound  to,  sue  all  his  insurers  together.    Or  he  may  recover  the 
whole  amount  of  his  damage  from  one,  and  let  that  one  seek 
♦contribution  to  reimburse  himself,  just  as  a  guaranteed  [*  239] 
creditor  has  a  choice  of  remedies,  and  may  at  his  option 
proceed  against  the  principal  or  his  sureties  (y). 

The  total  of  various  policies  mmt  exceed  loss. — Contribution  only  can 
take  place  where  double  insurance  exists,  i.  e.,  where  one  or  more 
policies  have  been  taken  out,  the  total  amount  whereof  exceeds  the 
total  value  of  the  subject-matter  injured.* 

Tlie  assured,  being  entitled  only  to  indemnity,  can  only  recover 
the  amount  of  his  loss.  And  he  is  entitled  to  sue  his  insurers  sep- 
arately or  successively  until  he  has  been  recouped  in  full.  To  such 
action  or  actions  it  is  a  good  defence  that  the  assured  has  been  al- 
ready indemnified  wholly  or  in  part  by  other  iuvsurers. 

The  insurer,  on  the  other  hand,  is  only  entitled  to  contribution 
when  he  has  paid.  But  he  can  cither  call  in  the  other  insurers  as 
third  parties  in  theassured's  action  against  him,  or  pay  and  sue  the 
other  insurers  for  contribution  in  a  separate  action. 

Same  property  must  be  insured. — There  is  one  other  condition  pre- 
cedent to  the  right  to  contribution,  that  the  same  property  or  inttr- 
est,  or  some  part  thereof,  shall  have  been  insured  with  the  several 


(«)  North-Eaatern  Insurance  Co.  v.  Armstrong,  L.  R.  5  Q.  B.  244,  80  L  J.  Q. 
B.  81,  21  h.  T.  N.  S  822,  18  W.  R  620,  doubted  in  BtirHandy.  limhcanachi,  7 
App.  Cas.  833,  61  L  J.  Q.  B.  648,  47  L.  T.  N.  S.  277,  81  W.  R.  65. 

(<)  So  ill  America,  The  Potomac,  supra. 

(m)  North  British  and  Mercantile  v.  London.  Liver/iool.  and  Globe,  5  Ch.  D. 
581,  per  JamcH,  L  J.,  45  L.  J.  Ch.  548,  4«  do  5:)7.  VS  h.  T.  N.  S.  021) 

(X)  Pendlebur}/  v.  Walker,  4  Y.  &  C  Kx.  424,  441. 

(y)  Stacetf  v.  Franklin  Fire,  2  WnttH  &  Seij?   (Peiin.)  600. 

'  OwnerH  shipped  goods  by  a  carrier  and  insured  it  Carrier  had  policies  cov- 
ering carffoeM  of  its  stpamer,  containing  clause  limiting  insurance  to  interest  of  in- 
sured. Held,  not  to  be  do\iblo  insurance,  and  the  shipper's  insurers  could  not 
make  the  carrier's  insurers  contribute  to  their  loss.  Royster  v.  Roanoke  Steam* 
boat  Co.,  id  Fed  Rep.  492. 

201 


V.U 


'i", 


h:m 


m 


\4 


'lit '*',;■ 


I 


i! 


li 


*241 


THE   LAWS  OF  INSURANCE. 


insurers  (z),  who  claim  contribution  inter  ae;  and  the  usual  condi- 
tion as  to  contribution  only  means  that  there  is  to  be  a  limit  to  the 
liability  of  the  several  offices  where  the  respective  offices  are  legally 
liable  to  contribute  to  the  same  loss  in  respect  of  the  same  fire  (o). 

Difference  between  contribution  and  subrogation. — Contribution  is 
distinct  and  diflferent  from  subrogation  (6),  and  resembles 
[*  240]  the  remedies  between  *co-suretie8,  whereby  the  liability  of 
each  may  be  equalized  or  made  proportionate.  For  subroga- 
tion to  arise  the  assured  must  have  concurrent  remedies  against 
the  person  causing  the  loss  and  against  the  insurer.  Thus  he  may 
have  a  claim  against  the  baileee  of  his  goods  by  law,  custom,  or 
contract,  and  also  a  claim  against  his  insurers  by  contract.  There 
the  bailee  cannot  claim  against  the  insurer,  but  the  insurer  can  in 
satisfaction  of  the  loss  claim  against  the  bailee,  who  is  primarily 
liable,  and  stands  in  a  position  analogous  to  that  of  a  principal 
debtor  whose  debtor  is  guaranteed. 

In  contribution  no  one  insurer  is  more  liable  than  any  other,  no 
more  than  the  whole  loss  can  be  recovered,  and  the  aim  of  contri- 
bution is  to  distribute  the  loss  amongthe  different  persons  liable,  so 
as  to  give  each  and  uU  a  diminution  of  their  individual  loss ;  whereas 
in  subrogation  the  aim  is  to  shift  the  loss  on  to  those  who  would 
have  been  liable  if  there  had  been  no  insurance. 

If  the  bailee  insures  his  liability  and  the  bailor  insures  his  inter- 
est in  the  goods,  the  bailor's  insurer  is  entitled  to  recover  from  tlie 
bailee  or  his  insurer  the  whole  damage,  not  a  proportionate  part, 
since  each  only  represents  his  assured,  and  the  right  of  the  bailor 
against  the  bailee  is  not  to  contribution  merely,  but  to  complete  in- 
demnity for  the  loss  of  his  goods  (c). 

Scottish  Amicable  v.  Nortfiem  Assurance. — In  a  recent  Scotch  case  (<£), 
premises  on  which  there  were  several  mortgages  were  insured  un- 
der four  policies  in  the  name  of  the  first  mortgagees  primo  loco,  and 
of  the  mortgagors  in  revfersion.  Each  policy  contained  a  contribu- 
tion clause  identical  with  that  in  North  British  and  Mercantile  v. 
London,  Liverpool,  and  Globe,  already  cited.  The  premises 
[*  241]  were  also  injured  in  favour  of  *Bub8equent  mortgagees  in 
the  first  place,  and  the  mortgagors  in  reversion  by  policiis 
containing  a  similar  clituse.  The  mor^agors  paid  for  all  the  poli- 
cies, and  oft  a  fire  occurring  the  first  mortgagees  sued  on  their  jjoli- 
cies.  The  insurance  companies  objected  that  the  other  three  com- 
panies were  not  called  on  for  contribution  The  Court  overruled 
the  objection  on  the  grounds — 


(«)  Tuck  V.  Harford,  BO  New  Hatnp.  820.  whore  two  pnlicieR  wen,  taken  out  by 
mortgagor,  one  by  mortgagee  on  own  interest.  Contribution  on  value  of  the 
equity  of  redemption. 

(a)  North  liritish  and  Merrantile  v.  Jjondon,  Lmrponl  and  Globe,  5  Ch.  D. 
509.  582,  per  James,  L.  J.,  80  L  T  N.  8  209,  40  L.  J.  Ch.  687. 

(b)  Same  case,  588,  per  MelliHh.  L.  J. 

(f)  North  British  and  Mercantile  v.  London,  Liverpool  and  Globe,  ubi  mpra. 
(d)  Scottish  Amicable  v.  Northern,  11  C.  S.  C.  (4th  series)  287,  12  Sc.  L.  R. 
189. 

iiU8 


INDEMNITY. 


*242 


(1)  That  the  pltiintiflfs  had  no  right  of  action  against  the  insurers 
on  the  last  three  policies,  but  only  on  the  first  four. 

(2)  That  the  words  "same  property"  in  the  contribution  clause 
meant  the  same  proprietary  interest,"  the  particular  security,  es- 
tate, or  interest,  which  the  insurance  was  to  protect,  and  no  other." 

(3)  That  the  first  mortgagees  had  insured  their  own  interest,  nnd 
that  no  subsequent  insurance  by  other  mortgagees  could  diminish 
that  interest. 

Per  Lord  WLaren.  Insurers  of  first  mortgagees  cannot  claim  contri- 
bution from  insurers  of  second  mortgagees,  if  the  policies  cover  several  in- 
terests if  the  different  mortgages. — The  opinion  of  the  Lord  Ordinary, 
which  was  approved  by  the  Court  of  Session,  was  as  follows  (e): — 
"The  clause  of  contribution  can  have  no  other  object  or  purpose 
than  in  the  case  supposed  to  reduce  the  liability  of  the  subscribing 
companies  to  that  of  underwriters,  that  is,  a  liability  under  which 
the  assured  should  be  entitled  to  r*  cover  the  full  amount  of  his 
claim  in  payments  from  the  several  contributories,  but  should  not 
be  entitled  in  case  of  partial  loss  to  throw  the  loss  on  one  or  more 
contributories  to  the  exclusion  of  the  others.  My  interpretation  of 
the  clause  carries  out  this  object.  Under  the  defenders  contention 
the  pursuers  would  not  recover  the  full  amount  of  their  claim,  be- 
c  luso  their  view  involves  the  division  of  the  loss  into  seven  shares, 
of  which  the  pursuers  would  only  recover  four.  The  division  to 
be  applied  to  the  sum  assured  by  the  Northern  Company, 
if  the  contract  *is  a  fair  one,  must  be  the  ratio  of  the  ng-  [*  242] 
pregate  liability  of  the  contributories  to  the  actual  loss. 
The  defender's  proposal  is  to  increase  the  division  by  adding  to  it 
the  liability  of  persons  who  are  not  contributories.  It  is,  I  think, 
a  good  reason  for  rejecting  their  contribution,  that  it  would  enable 
insurance  companies  to  evade  fulfillment  of  their  obligations.  An- 
other reason  for  rejecting  it  is  that  under  it  the  right  of  the  assured 
would  be  liable  to  be  diminished  by  subsequent  acts  of  parties  not 
under  their  control.  In  the  present  case,  for  example,  it  is  said 
that  a  second  bondholder  [mortjjragee],  by  effecting  his  insurance, 
has  diminished  the  claim  ot  the  first  bondholder  to  a  proportionate 
extent.  A  third  reason  against  the  defenders'  contention  is  that  in 
the  case  of  a  total  loss  it  leads  to  the  result  that  tfie  indemnity  is 
to  be  shared  between  the  first  and  second  bondholders  in  propor- 
tion to  the  amount  of  their  insurance,  though  in  equity  the  first 
bondholder,  if  covered  by  insurance,  ought  to  recover  to  the  extent 
of  his  bond,  and  the  second  bondholder  ought  only  to  recover  the 
difference  between  that  sum  and  the  worth  of  the  property,  that 
diffi'rence  evidently  being  the  limit  of  his  insurable  interest.''  And 
the  obligation  of  the  later  companies  is  to  indemnify  the  deferred 
creditor  should  hesufier  from  the  consequences  of  a  fire;  and  if 
this  creditor  does  not  suffer  ]o«s,  there  cannot  be  brought  against 
them  any  claim  for  indemnification  (e).    They  are  to  make  up  loss 


(e)  11  C.  S  C.  (4th  Beries)  290. 

(e)  Same  case,  294,  per  Lord  Craighill. 


208 


■I? 


'^'i.ii 


♦  244 


THE   LAWS  OF  INSURANCE. 


to  the  party  whom  they  have  assured;  they  are  under  no  obliga- 
tion  to  idemnify  or  to  enter  into  arrangements  for  indemnifying  a 
preferred  creditor. 

The  plaintiffs  were  suing  for  what  was  theirs,  and  not  in  the  re- 
versioners' interest. 

Scottish  Amicable  v.  Northern  Assurance  discussed. — The  case  turns 
on  what  was  meant  to  be  insured — the  i)roperty  itself  or  the  mort- 
gagee's interest  in  each  caee.  If  the  former,  which  is  sup- 
[*  243]  ported  by  the  fact  *that  the  mortgagor  paid  the  premiums, 
contribution  would  seem  proper.  But,  on  the  other  hand, 
this  would  enable  the  mortgagor  to  diminish  the  first  mortgagee's 
security  under  the  first  policies ;  and  the  only  way  to  keep  up  his 
title  is  to  let  him  recover  on  the  policies,  which  are  his  security,  or 
else  to  reinstate,  or  thirdly,  to  give  the  insurers  paying  him  subro- 
gation ngjiinst  the  mortgagor.  In  this  case  the  unhappy  mortgagor, 
by  providing  a  security  for  his  mortgagee,  would  be  simply  giving 
the  insurers  a  right  of  recourse  against  himself.  But  reinstate- 
ment would  be  the  true  solution,  since  thereby— 

The  first  and  puisne  incumbrancers  would  have  their  security 
preserved. 

The  debtors  would  not  be  liable  to  subrogation. 

The  insurers  could  contribute  rateably  to  reinstatement  without 
possibility  of  claim  (/). 

In  the  case  under  discussion,  if,  after  satisfying  the  claims  of 
the  mortgagees  on  their  several  policies,  there  still  remained  a  bal- 
ance of  loss,  that  would  be  damage  to  the  mortgagors'  interest,  and 
quoad  that  all  the  companies  would  contribute,  that  being,  if  the 
Court  were  right,  the  only  interest  common  to  all  the  policies. 

The  Scotch  Courts  hold  that  the  assured  cannot  select  his 
debtor,  but  that  insurers  of  the  same  interest  may  make  their  right 
to  rateable  contribution  available  in  a  question  with  the  common 
creditor  (g).  In  England  the  assured  can  sue  which  insurer  he 
chooses,  but  contribution  may  be  obtained  bv  means  of  Ord.  xvi. 
r.  48  of  the  Rules  of  the  Supreme  Court,  1883. 

Contribution  contrasted  with  subrogation. — Contribution  differs  from 
subrogation  in  several  respects.  In  the  first  place,  it  im- 
[*  244]  plies,  as  before  ^mentioned,  more  than  one  contract  of 
assurance  each  of  which  undertukes  a  similar,  if  not  iden- 
tical, liability  in  respect  of  the  same  subject-matter  and  the  same 
interest  therein.  Secondly,  the  amount  of  tlie  insurances  must  ex- 
ceed the  value  of  the  property  or  the  damage  done  to  it.  When 
these  circumstances  exist,  the  insurers  by  contribution  distribute 
the  actual  loss  in  such  a  way  that  each  bears  his  proper  share. 

The  one  thing  which  contribution  has  in  common  with  subroga- 


(/)  See  Lord  Young'H  opinion,  ibid.,  295,  in  which  he  takes  the  same  view  of 
inmirance  on  buildincs  as  did  Jumos,  L.  J.,  in  Rayner  v.  l^reston,  18  Ch.  D.  1, 
50  I..  J.  Ch.  47a,  44  L  T.  787,  iO  W.  R.  547 

(g)  lies.  C.  (4th  series),  at  p.  808,  per  Lord  Justico-Clerlt  Monoreiff. 
204 


INDEMNITY. 


245 


tion  is  to  reduce  the  indemnification  of  the  assured  within  the 
bounds  of  real  indemnity. 

For  subrogation  there  need  not  be  more  than  one  policy,  nor 
need  that  offer  com^)lete  indemnity.  All  that  is  necespary  is  that 
there  should  be,  besides  the  insurer,  another  person  liable  to  the 
assured,  or  some  other  means  of  indemnity  open  to  the  assured 
other  than  and  besides  recourse  to  his  insurer.  In  such  a  case  the 
principle  of  subrogation  will  apply,  and  will  entitle  the  insurer, 
not,  as  in  contribution,  merely  to  a  rateable  reduction  of  the  in- 
demnity paid  by  him,  but  to  the  enforcement  of  the  assured's 
rights  against  others  to  the  full  extent  of  that  indemnity. 

Consignor  and  congignee. — If  the  consignee  takes  out  policies  on 
goods  held  by  him  in  trust  (in  the  mercantile  sense),  and  the  con- 
signors effect  policies,  each  on  his  own  goods  (^),  or  if  the  con- 
signee effect  policies  also  in  their  name,  this  will  be  a  case  for  con- 
tribution if  the  consignor's  policy  is  so  drawn  as  to  cover  the  mer- 
chandise and  not  merely  the  consignor's  interest  therein  (i). 

Policy  may  be  shown  not  to  be  a  contributing  one. — But  though  a 
poUcy  on  the  face  of  it  is  a  contributing  policy,  the  course  of  deal- 
ing may  be  given  in  evidence  to  show  that  it  was  not  so  in- 
tended when  the  *  policy  in  question  is  not  a  contract  be-  [*  245] 
tween  the  parties  to  the  action  (k).  In  some  cases  a  floating 
)oIicy  has  Deen  held  not  liable  to  contribute  rateably  with  specific 
)olicies  covering  the  whole  amount  (0,  and  in  others  it  has  been 
leld  liable  (m). 

Condition  as  to  contribviion. — The  condition  as  to  contribution 
usually  provides  that  the  insured  shall  not  be  entitled  to  recover 
from  the  company  any  greater  proportion  of  the  loss  or  damage 
than  the  amount  insured  bears  to  tne  whole  sum  insured  on  the 

Property,  whether  such  insurance  be  by  ppecific  or  by  general  or 
oating  policies  and  without  reference  to  the  solvency  or  the  liabil- 
ity of  other  insurers  (n).  The  insurers  are  liable  in  the  same  ratio 
■Mi  their  risks  bear  to  the  total  risk  (o). 

J  t  is  doubtful  whether  in  case  of  an  insurance  against  fire  on  goods, 
with  a  clause  stipulating  for  the  payment  of  only  a  rateable  pro- 
portion in  case  of  another  insurance,  if  the  assured  procures  another 
insurance  on  the  same  risk,  and  the  loss  is  less  than  the  whole 
amount  insured,  he  can  recover  the  whole  loss  from  the  first  in- 
surer, or  only  a  pro  rata  payment  from  each  (/)). 

[h)  Waters  v.  Monarch,  5  E.  &  B  870,  25  L.  J.  Q.  B.  102,  26  L.  T.  217,  4  W. 
R.  245,  2  Jur.  N.  S.  375.  Home  Insurance  Co.  v.  Baltimore  Water  Co.,  05J  U.  S. 
(3  Otto)  527,  C41. 

(t)  Robhina  v.  Fireman^ s  Fund  Insurance  Co.,  10  Blatch.  (C.  Ct.  U.  S.)  122. 

(ifc)  Lowell  Co.  V.  Safeguard  Fire,  88  N.  Y.  501  (1882). 

(I)  Fairchild  v.  Liverpool  and  London,  CI  N.  Y.  65. 

Im)  Merrick  v.  Germania^  B4  Penn.  277. 

(rt)  Johnson  V.  North  British  and  Mercantile,  1  Holmes  (C.  Ct.  U.  S.)  117. 

(o)  Barnes  v.  Hartford  Co  ,  8  McCrary  (U.  S.  Circ.  Ct.)  226. 

(p)  atacey  v.  Franklin  Fire,  2  Watta  &  Serg.  (Penn.)  506,  548. 

205 


*«! 


! 


♦  247 


THE  LAWS  OF  INSUBAKCE. 


i' 


[*246] 


*CHAPTER  XI. 

CONDITIONS  AS  TO  AVERAGE. 


Two  kinds. — Conditions  on  this  subject  are  obscure  and  little  un- 
derstood.   They  take  two  forms — 

(1)  A  condition  declaring  the  property  insured  to  be  subject  to 
the  conditions  of  average. 

(2)  A  condition  declaring  that  if  any  other  subsisting  insurance 
or  insurances  effected  by  the  insured  or  any  other  person,  cover- 
ing any  property  by  the  policy  in  question  insured,  either  exclu- 
sively or  together  with  any  other  property  in  and  subject  to  the 
same  risk,  should  be  subject  to  the  conditions  of  average,  the  insur- 
ance on  such  property  under  the  policy  should  be  subject  to  the 
conditions  of  average  in  like  manner  (a). 

Qmditum.  Average. — The  aim  of  those  conditions  is  to  prevent 
under-insurance,  just  as  conditions  relating  to  contribution  seek  to 
obtain  the  benefit  for  each  insurer  of  another  insurance.  Each  par- 
ticular assured  being  bound  by  the  condition  of  his  particular  policy, 
it  results  that  where  several  insurances  have  been  made,  indirect 
compulsion  can  be  put  upon  persons  not  bound  to  a  particular  in- 
surer through  the  insurer  with  whom  they  have  contracted,  in  the 
interests  of  the  general  body  of  contributing  insurers. 

Proportion  payable. — The  conditions  of  average  are  as  follows :— If 

property  is  declared  subject  to  average,  and  the  property  covered  at 

the  time  of  fire  exceed  the  sum  insured  at  the  time  of  the 

[*  247]  fire,  the  assured  will  receive  on  his  *insurance,  not  the  whole 

amount  of  the  loss  or  damage,  but  only  such  portion  thereof 

as  ascertained  by  a  rule-of-three  sum,  in  the  following  form : 

Value  of  property  covered :  insured  amount  : :  damage  done; 
damage  payable. 

The  consequence  of  this  rule  is  to  make  the  assured  his  own  in- 
surer as  to  a  rateable  portion  of  the  loss,  determined  by  the  ratio 
between  the  value  of  the  goods  at  risk  at  the  date  of  the  fire  and 
the  amount  insured  thereon.  The  aim  of  the  condition  is  to  pro- 
vide full  insurance. 

Policy  subject  to  average  and  specific  policy. — If  the  property  in- 
cluded in  a  policy  subject  to  average  U  covered  by  other  and  more 
specific  insurance,  which  applies  at  the  time  of  fire  only  to  part  of 
the  property  insured  by  the  first  policy  and  to  no  other  property, 
then  the  policy  subject  to  average  only  insures  the  propertv  ns  to 
an  excess  above  the  specific  policies,  and  that  excess  will  bo,  if  need 
l)e,  subject  to  average. 

(a)  North  British  and  Mercantile  v.  London,  Liverpool,  and  Globe,  6  Ch.  D. 
569,  45  L,  J.  Ch.  848,  46  do.  587,  89  L.  T.  N.  S.  629. 


CONDITIONS  AS  TO  AVERAGE. 


*249 


Specific  insurance. — By  specific  insurance  is  meant  a  policy  or 
policies  whereby  tiie  amount  imured  is  payable  irrespecli^-e  of  the 
value  of  the  projjerty  within  the  risk  at  the  time  (b). 

If  the  specific  insurances  cover  the  whole  property,  the  insurer, 
by  a  floating  policy,  will  not  have  to  contribute,  nor  will  the  average 
stipulations  bring  him  under  any  liability  (c). 

BuUdings  and  furniture  separately  insured  in  same  policy. — In  an 
insurance  on  buildingn  for  £2,000,  and  furniture  for  £2.000,  sepa- 
rately valued,  but  in  the  same  policy,  it  was  stipulated  that,  in 
case  of  any  other  insurance  thereon,  the  assured  should  not  recover 
on  this  policy  any  greater  proportion  of  the  loss  than  the  amount 
assured  by  the  insurer  should  bep  •  to  the  whole  amount  assured 
thereon.  A  second  insurance  was  taken  out  on  building 
and  furniture  generally  for  *£2,000,  and  in  this  case  the  [*  248] 
first  insurers  were  held  bound  to  pay  two-thirds  of  the  loss 
caused  by  a  fire,  and  not  permitted  to  contend  that  the  second  in-, 
purance,  being  on  buildinvis  and  furniture  equally,  must  operate  to 
its  full  extent  on  both  or  either  (d). 

Two-thirds  clause. — ^While  the  conditions  of  average  are  inserted 
to  ensure  full  insurance  on  fluctuating  amounts  of  goods,  and  to 
prevent  policy-holders  from  covering  bjr  their  policies  goods  in  ex- 
cess of  the  amount  insured  thereby,  a  similar  condition  is  inserted 
in  some,  especially  mutual  marine  policies,  and  in  Canada  and  the 
United  States  in  policies  on  houses,  &c.,in  the  shape  of  a  two-thirds 
clause,  which  works  like  the  average  condition,  as  will  presently  be 
seen,  and  under  which  the  amount  of  indemnity,  whatever  the  ac- 
tual amount  insured,  is  restricted  to  two-thirds  of  the  value  of  the 
subject-matter  at  the  time  of  the  fire.  In  such  a  case  the  value  of 
house  or  goods  may  fluctuate,  and  the  amount  recoverable  will 
never  be  the  actual  damage  done,  but  only  a  sum  not  exceeding 
two-thirds  the  cash  value  of  the  premises,  and  in  any  event  not 
exceeding  the  amount  on  which  premium  is  paid.  Thus  if  a 
building  were  insured  for  £1,500,  and  it  was  totally  destroyed  by 
fire,  being  at  the  time  worth  £1,800,  the  as-ured  would  under  such 
a  policy  recover,  not  £1,500,  but  £1,200  only  (e). 

Application  of  two-thirds  clause  where  separate  insurance  of  separate 
properties. — Where  a  separate  insurance  is  effected  on  separate 
properties,  and  the  two-thirds  value  clause  applies,  the  insured  can 
recover  only  the  two-thirds  o(  the  damage  done  to  the  particular 
property  injured,  and  not  two-thirds  of  the  whole  insurance  upon 
it.  Thus  if  a  house  and  furniture  were  insured  for  £1,500, 
the  house  at  £1,000  and  furniture  at  £500,  and  tho*former  [*  249] 
were  wholly  destroyed,  the  amount  recoverable  would  not 


(b)  Bunyon  Fire  Ins.  2  and  144  et  sea. 

(c)  Fairchild  v.  Licerpool  and  London,  51  N.  Y.  65.     Per  contiu),  Merrick  v. 
Germania,  64  Penn.  277. 

(d)  Unitarian  Congregation  v    Western  Assurance  Co.,  26  U-  C  (Q.  B  )  175. 

(e)  Williamson  v.  Gore  Dittrid  Mutual,  2<\  U.  C.  (Q.  B.)  145.    See  Post  v. 
Hampshire  Mutual,  &8  Mass  (12  Metcalfe)  656- 

207 


'^'-mm 


'■■•'■  iM 

mm 


*250 


THE  LAWS  OF  INSURANCE. 


be  £1000,  two-thirda  of  £1500,  but  two-thirds  of  the  £1000,  that 
being  the  limit  of  indemnity  for  the  hou-e  (/). 

Different  subjects  insured  at  separate  amounts  in  same  policy.— 
Where  different  subjects  are  insured  at  separate  amounts  specified 
under  one  policy,  containing  a  clause  that  the  company  shall  be 
liable  to  pay  to  the  assured  two  thirds  of  all  such  loss  or  damage 
by  fire  as  shall  happen,  not  exceeding  the  aggregation  of  the 
amounts  insured^  and  amounting  to  no  more  on  any  one  of  the 
diflFerent  properties  than  two-thirds  of  the  value  of  each  at  the 
time  of  loss,  and  not  exceeding  on  each  the  sum  it  is  insure  1  for, 
the  policy  is  to  be  treated  as  a  separate  insurance  upon  each  sub- 
ject of  insurance,  and  the  company  is  liable  only  for  two-thirds  of 
the  loss  on  each  subject,  notwithstanding  that  the  loss  on  some 
subjects  is  less  than  the  amount  insured  thereon,  and  the  whole 
loss  less  than  the  whole  amount  insured  (g). 

Difference  of  average  in  marine  and  fire. — Average  in  fire  policies 
is  quite  a  different  thing  from  average  in  marine  policies.  In  the 
latter  it  means  a  rateable  contribution  to  the  damage  caused  to 
part  of  the  adventure  by  a  common  peril,  t.  e.,  the  whole  adven- 
ture is  dealt  with  in  solido,  and  any  loss  is  treated  as  lost  by  all,  to 
be  apportioned  among  the  co-adventurers  or  their  insurers,  if  any; 
whereas  the  conditions  of  average  in  fire  assurance  aim  at  lessen- 
ing the  indemnity  payable  to  the  assured. 

Average  clause  in  fire  policy. — The  average  clause  in  a  fire  policy 
works  in  the  same  way  as  the  rule  for  estimating  the  amount  of 
the  insurer's  liability  on  a  valued  sea  policy.  In  the  la«ter,  if  an 
adventure  be  valued,  the  insured  is  estopped  in  case  of  loss  from 

saying  that  the  value  exceeds  the  amount  in  the  policy. 
[*  250]     *And  if  he  has  a  partial  loss,  he  will  only  receive  an  in- 
demnity for  such  loss  calculated  by  the  following  propor- 
tion.   As  the  actual  value  is  to  the  actual  loss,  so  is  the  insured 
value  to  the  sum  recoverable. 

Thus,  if  a  ship  worth  £15,000  be  valued  at  £10,000,  and  suffer 
£5000  worth  of  damage,  not  that  sum,  but  £3333  6«.  8rt.  will  be  re- 
covered (h). 

So  if  a  nre  policy  subject  to  average  the  policy  be  for  £10,000  on 
goods,  and  £15,000  worth  of  goods  oe  within  the  risk  at  the  time 
of  the  fire,  the  assured  will  only  get  two-thirds  of  the  amount  of 
his  loss. 

Goods  in  lighters. — A  marine  average  loss  on  a  valued  policy 
would  be  adjusted  in  just  the  same  way.  And  the  same  principle 
is  applied  to  policies  on  goods  afloat  in  Tighter  canal  boats,  &c.  (i). 
The  amount  at  risk  on  the  day  of  loss  in  all  the  owner's  boats  con- 


(/)  M*CuUoch  V.  Oore  DiatHet  Jifutual  Fire  Inmrance  Co.,  83  U.  C.  (Q.  B.) 
610. 

7)  King  v.  Prince  Edward  C\'<y  Co ,  19  U.  C  (C.  P )  184. 

\)  Letoia  v.  Rucker,  2  Burr.  1167,  1171,  per  Lord  Mansfield.    Irving  v.  Man- 


S515 


ntn^, 


784. 


1  H.  L.  C.  287.  806,  2  C.  B. 
(i)  Crowley  v.  Cohen,  ZK  k  Ad.  478,  1  L.  J.  N.  S.  K.  B.  166. 

208 


CONDITIONS  AS  TO  AVERAGE. 


*250 


taining  goods  covered  by  the  policy  is  taken  (k),  and  the  amount 
payable  for  damage  to  any  lighter  is  calculated  as  follows : — As  the 
whole  value  of  goods  afloat  is  to  the  damage  done,  co  is  the  whole 
insurance  to  the  amount  payable. 

Thus  if  there  be  £10,000  of  goods  afloat,  and  the  policy  is  for 
£5000,  the  damage  done  being  £1000,  the  amount  payable  will  be 

JE500. 

In  the  policies  against  land  risks  each  difierent  loss  must  be  de- 
clared separately  as  it  arises.  But  in  marine  policies  the  losses  of 
each  voyage  are  declared  at  the  end  of  the  voyage,  and  may  be 
lumped  together  (I). 

(k)  Joyce  V.  Kennard,  L.  R.  7  Q.  B.  78,  41  L.  J.  Q.  B.  17,  25  L.  T.  N.  S.  932, 
20  W.  R-  233.  See  also  Buchanan  v.  Liverpool,  London  and  Globe  Co.,  21  Sc- 
L  R.  696. 

(I)  Stewart  v.  Merchants'  Marine  Co.,  16  Q.  B.  D.  619,  55  L  J.  Q  B.  81,  53 
L.  T.  892,  84  W.  R.  208. 


1     B 

m 

^1   H 

U 

1  i 

m:-.\ 

VI      M 

jjj  ;      U 

^:;'4rifB|i 

■  ■■'  ■•'  ^1!  Sii 

'mm 

*>m 

tt.  ^H^ll 

■  1   '' 

i'liil 

it.  I  1 


:-,    >, 


U  PORTER  ON  INSURANCB. 


209 


♦  262 


THE  LAWS  OF  INSUHANGE. 


[*  251] 


♦CHAPTER  XII. 


REINSTATEMENT. 


Option  to  reinstate.  I^ect  of. — The  position  of  insurers  under  a 
contract  of  insurance  containing  an  option  to  reinstate  has  been 
well  laid  down  as  follows : — 

The  insurers,  in  case  of  liability  arising  against  them  on  their 
contract,  had  an  option  as  to  the  manner  in  which  they  would  dis- 
charge their  liability.  One  mode  looked  to  the  compensation  of 
the  insured  by  the  payment  of  damages  for  his  loss,  the  other  to 
the  restoration  of  the  subject  of  insurance  to  its  former  condition. 
It  could  not  have  been  contemplated  bv  the  parties  that  both  meth- 
ods of  performance  were  to  be  pursued.  The  selection  by  the  in- 
surers of  one  of  those  alternatives  necessarily  constituted  an  aban- 
donment of  the  other  (a).  The  election  of  the  privilege  of  restora- 
tion involves  the  rejection,  not  only  of  the  right  to  discharge  its 
liability  by  the  payment  of  damages  to  the  insured,  but  also  those 
provisions  of  the  contract  having  reference  to  that  method  of  per- 
formance. From  the  time  of  such  election  the  contract  between 
the  parties  becomes  an  undertaking  on  the  part  of  the  defendant 
to  build  or  repair  the  subject  insured,  and  to  restore  it  to  its  former 
condition,  and  the  measure  of  damages  for  a  breach  of  the  substi- 
tuted contract  does  not  necessarily  depend  on  the  amount  of  dam- 
age inflicted  by  the  peril  insured  against  (6). 
[*  252]  If,  therefore,  the  insurers  elect  to  reinstate  and  their  *re- 
instatement  is  not  satisfactory,  they  cannot,  it  seems,  plead 
refusal  by  the  assured  to  arbitrate  as  an  answer  to  a  claim  for  dam- 
ages in  respect  of  improper  reinstatement  (c). 

Reinstatement.  14.  Geo.  III.  c.  78,  a.  83. — By  the  old  Metropolitan 
Building  Act  {d)  it  is  provided  that  insurers  may,  "  upon  the  re- 
quest of  any  person  or  persons  interested  in  or  entitled  unto  any 
house  or  houses,  or  other  buildings,  which  may  thereafter  be  burnt 
down,  demolished,  or  damaged  by  fire,  or  upon  any  grounds  of  sus- 
picion that  the  owner  or  owners,  occupier  or  occupiers,  or  other 
person  or  persons  who  shall  have  insured  such  house  or  houses  or 
other  buildings,  have  been  guilt^f  of  fraud,  or  of  wilfully  setting 
their  house  or  houses  or  other  buildings  on  fire,  to  cause  the  insur- 


cited. 


Times  Co.  v.  Hawke,  1  F.  &  F.  406,  28  L.  J.  Ex.  817. 
Wj/nkoop  V.  Niagara  Fire,  43  Am.  Rep.  686,  91 N.  Y.  478,  and  cases  there 
Morell  V.  Irving  Fire,  88  N.  Y.  429. 
Wynkoop  v.  Niagara  Fire,  mpra. 
14  Geo.  III.  0.  78. 

210 


REINSTATEMENT. 


*258 


ance-money  to  be  laid  oat  and  expended,  as  far  ns  the  same  will 
go  towards  rebuilding,  reinstating,  or  repairing  such  house  or 
houses,  or  other  buildings  so  burnt  down,  demolished,  or  damaged 
by  fire,  unless  the  party  or  parties  claiming  such  insurance-money 
shall  with  in  sixty  days'next  after  his,  her,  or  their  claim  is  adjusted, 
give  a  sufficient  security  to  the  insurers  that  the  insurance-money 
shall  be  laid  out  and  expended  as  aforesaid,  or  unless  the  said  in- 
surance-money shall  in  that  time  be  settled  and  disposed  of  to  and 
amongst  all  the  contending  parties,  to  the  satisfaction  and  appro- 
bation of  the  insurers." 

Building  insured  in  specie. — ^A  building  is  insured  as  a  building. 
It  is  not  merely  the  material  that  is  insured,  but  the  beneficial  in- 
terest of  the  assured  therein  (e),  and  therefore,  to  prove  a  total  loss, 
absolute  destruction  of  the  material  need  not  be  proved.  It  is  enough 
to  show  that  the  building  has  lost  its  identity  and  specific 
character  (/).  *This  is  in  accordance  with  the  rule  laid  [*  253] 
down  by  the  Courts  as  to  marine  insurance  (g). 

Scope  of  8. 83. — It  was  for  long  thought  that  this  section  applied 
only  to  property  within  the  bills  of  mortality,  but  in  1864  the  Lord 
Chancellor,  Westbury  (A),  held  that  it  was  of  general  and  merely  of 
local  application.  It  was  at  the  same  time  decided  that  the  power 
of  reinstatement  under  the  Act  applied  only  to  houses  and  build- 
ings, and  such  fixtures  as  would  pass  by  the  conveyance,  and  there- 
fore not  to  trade  fixtures  removable  by  the  tenant.  The  right  of  re- 
instatement in  any  case  only  exists  by  statute  or  special  contract, 
and  in  no  way  forms  part  of  the  common  law  of  insurance  (i).  The 
whole  of  the  Metropolitan  Building  Act,  except  ss.  83,  86,  is  re- 
pealed by  subsequent  statutes  (K). 

Under  the  statute  the  insurer  is  authorized  and  required  to  rein- 
state in  all  cases  of  suspicion  that  the  assured  has  been  guilty  of 
fraud. 

Inmrer's  obligation  f-o  reinstate. — Further  on  the  application  of  any 
person  interested  (I)  in  the  property,  the  insurer  must  reinstate, 
unless  the  parties  interested  come  to  terms.  Any  one  having  any 
right  or  interest  to  or  in  the  premises  (m)  can  thus,  if  he  has  notice 
of  an  insurance,  stop  the  proceeds  thereof,  and  insist  on  their  being 
applied  to  the  restoration  of  the  premises  in  respect  of  which  they 
have  been  received.    It  was  probably  intended  oy  this  Act  to  pre- 

(e)  Castellain  v.  Preston,  11  Q.  B.  D.  380  at  397,  per  Bowen,  L.  J.,  52  L.  J, 
Q.  B.  366,  49  L.  T.  N.  S.  29,  81  W.  R.  557. 

(/)  Hiick  V.  Globe  Irisurance  Co.,  127  Mass.  806,  34  Am.  Rep.  376.  Williams 
V.  Hartford  Co.,  85  Am.  Rep.  77. 

(gf)  Insurance  Co.  v.  Fogarty,  19  Wall.  (U.  S.)  644.  Hugg  v.  Augusta  Insur' 
ance  Co.,  7  How.  (U.  S.)  566 ;  and  see  Roux  v.  Salvador,  8  Bing.  N.  C  266. 

'h)  Ex  parte  Gordey,  4  De  O.  J.  &  S  477,  84  L.  J.  Bkcy.  1,  13  W.  R.  60,  11 
L.  T.  N.  S.  319,  6  N.  R  22,  10  Jur.  N.  S.  108(j, 

(t)  See  Wallace  v.  Insurance  Co.,  4  Louis.  0.  S.  289. 

Ik)  7  &  8  Vict.  c.  84 :  18  &  19  Vict.  c.  122. 

(l).  Paris  V.  Gilham  (1813),.  Cooper  66,  per  Grantj  M.  R. 

(m)  See  Ex  parte  Gorley,  supra.     Vernon  v.  Smtth,  6B.&  Aid.  1. 

211 


>? 


ELinilll 


mmn 

m 


255 


THE  LAWS  OF  INSURANCE. 


vont  landlords  who  had  insured  from  receiving  the  whole  proceeds 
of  the  property  and  then  insisting  on  their  rent,  or  tenants 
[*  254]  from  insuring'*the  freehold  value  and  by  receipt  thpreof  ex- 
ercising a  kind  of  power  of  sale  of  premises  in  which  tliey 
had  but  a  limited  interest  (n). 

In  Rnyner  v  Preston  (o)  James,  L.  J.,  expressed  his  opinion  that 
the  effect  of  this  Act  was  to  make  the  insurance  on  the  propirty 
on  behalf  of  all  interested;  and  he  said  that  he  had  never  known 
any  question  raised  as  to  the  interest  of  the  tenant.  But  in  Cmtd- 
lain  v.  Preston  (p)  Bowen,  L.  J.,  emphatically  dissents  from  this 
view. 

Notice  to  reinstate. — If  the  notice  to  reinstate  is  not  given  to  the  in- 
surance company  before  the  money  is  paid  over,  it  comes  too  hite, 
and  the  money  cannot  be  followed  by  the  person  giving  such  notice 
(q),  unless  he  is  a  mortgagee  (r),  nor  can  he  make  any  claim  on  the 
insurers  in  such  a  case. 

If  the  insurers  are  given  notice  and  will  not  reinstate,  the  remedy 
is  by  mandamus  (s).  The  remedy  is  open,  not  only  to  the  landlord 
as  in  the  case  below,  but  to  every  person  interested. 

Reinstatement  without  notice. — The  insurers  can  reinstate  on  their 
own  account  independently  of  quarrels  between  persons  interested 
in  the  property.  And  our  Courts  would  probably,  as  in  Scotland 
(t),  refuse  an  injunction  to  restrain  the  insurers  from  reinstating  in 
such  a  case;  for  "the  duty  of  the  insurance  company  to 
[*  255]  see  the  money  so  laid  out  *i8  twofold — first,  in  the  interest 
of  the  public  to  prevent  fraud ;  and  secondly,  in  their  own 
interest,  because  no  more  ought  to  be  laid  out  than  was  sufficient 
to  erect  buildings  of  the  former  character  and  description  (<). 

Interpleader  by  insurer. — It  was  held  that  the  insurance  company 
could  interplead  in  a  case  where  the  landlord  brought  an  action 
against  them  on  the  policy,  and  the  tenant  required  them  to  re-in- 
state (tt). 

Insurer  not  bound  to  pay  landlord  who  reinstates. — A  landlord  can 
not,  urfder  14  Geo.  III.  c.  78,  s.  83,  rebuild  his  houses  and  then  re- 


(?i)  See  Castellmn  v.  Preston,  11  Q.  B.  D.  580,  53  L.  .1.  Q.  B.  360.  49  I..  T.  N. 
S  20,  81  W.  R.  557,  and  iVt6/o  v.  North  America  Insurance,  1  Sandford  (N.  Y. 
Ch  )  551. 

((>)  Rayner  v.  Preston,  18  Ch.  D.  15,  50  L  J.  Ch  472,  44  L.  T.  N.  S.  37,  29 
W.  11.  547. 

(p)  11  Q.  B.  D.  309. 

(7)  Edwards  v.  West,  7  Ch.  D.  858,  47  L.  .1.  Ch.  463,  20  W.  R  507.  Leeds 
V.  Vhevtham,  1  Sim.  146.  Lees  v.  Whiteley,  2  Eq.  143,  85  L.  J.  Ch.  413,  14  L. 
T.  N.  S.  472. 

(r)  Con vevancinff  Act,  1881. 

(.?)  Simpson  v.  Scottish  Union,  8  L„  T.  N.  S.  112,  S2  L.  J.  Ch.  82.1,  1  H.  k  M. 
618,  11  W.  R.  469,  9  Jur.  N.  8.  711,  1  N.  R  537.  Reynard  v.  Arnold,  0  Ch. 
App   380. 

{t\  Hissettv.  Royal  Kxchnnne.  1  C.  S.  C.  (Ist  series)  175. 

it)  Simpson  v  Scottish  Union,  1  H.  &  M.  018,  82  L.  J.  Ch.  820,  8  L.  T.  N.  S. 
112.  11  W.  R  460.  ' 

(u)  Paris  v.  Gilham,  Cooper  Ch.  Ca.  (1818)  60. 

2U 


REIN'STATEMENT. 


*  256 


quire  the  insurance  company  to  pay  for  Hum.  Nor  can  a  tenant 
who  has  covenanted  to  insure,  and  has  mortgaged  his  inten  st,  re- 
build and  then  cla;.m  the  policy-moneys  in  reduction  of  the  cost  of 
rebuilding  as  against  such  mortgagee  (x). 

Condition  in  policy  as  to  reimtatiag. — Notwithstanding  the  A' t, 
fire  policies  usually,  if  not  invariably,  contain  a  condition  as  to  re- 
instiitement,  giving  the  insurers  an  option  to  reinstate  if  they  fo 
think  lit.  This  condition,  as  usually  drawn,  is  not,  we  think, 
merely  declaratory  of  the  power  possessed  by  the  insurers,  undtr 
8. 83,  to  reinstate  under  circumstances  of  suspicion,  but  enlarges 
their  power,  and  enables  them  to  reinstate  when  in  their  discretion 
they  think  proper.  The  Fc  servation  of  this  option  is  as  old  as  the 
case  of  Sadlers  Company  v.  Badcock  (y). 

W/ien  and  how  insurers  must  reinstate. — If  the  insurers  do  not  re- 
build within  a  reasonable  time  after  signifying  their  election  to  re- 
instate, they  may  be  sued  on  the  policy  (z). 

If  the  insurer  undertakes  to  reinstate,  he  must  either 
make  the  new  buildings  as  gaod  as  the  old,  or  *expend  all  [*  256] 
the  policy-moneys  in  a  proper  manner  on  the  rebuilding 
(").  If  he  fails  in  this,  he  is  liable  to  an  action  by  the  assured  for 
the  defective  quality  of  the  work,  and  must  compensate  him  for  it, 
but  not  to  an  injunction  restraining  him  from  rebuilding  im- 
properly (6). 

Reinstatement  where  total  or  partial  loss,  and  where  things  cannot  be 
replaced  in  statu  quo. — Where  a  fire  policy  contains  a  clause  that 
the  company  may  reinstate  damaged  or  restored  property,  the 
company  may,  if  the  property  is  destrojred,  replace  the  things  bv 
others  which  are  as  good.  If  the  goods  insured  are  not  destroyed, 
but  only  damaged,  the  company  may  -^store  them  to  the  place  and 
condition  they  were  in  before  the  fire,  and  if  the  clause  says  noth- 
ing about  locality,  and  the  things  insured  cannot  be  put  back 
where  thej^  were  before  the  fire,  the  assured  may  require  the  com- 
pany to  reinstate  within  a  reasonable  distance  of  the  former  lo- 
cality (c). 

In  Alchom  v.  Savile  (d),  a  case  in  which  the  provisions  of  the 
Building  Act  made  it  impossible  to  rebuild  the  house  as  it  was  be- 
fore the  fire  («),  it  was  held  that  the  company  might  be  sued  for 


(x)  Simpson  v.  Scottish  Union,  ubi  supra.  Gordon  v.  Ingram,  23  L.  J.  Ch. 
4/8. 

(y)  2  Atkyng  554. 

(2)  Home  Mutual  v.  Garfield,  14  Am.  Rep.  27,  00  Illinois  124. 

(tf)  Parker  \.  Eanle,  75  Mass.  (9  Gray  )  152.  Cf.  Insinance  Co.  v.  Hope,  58 
Illinois  75,  11  ^ni.  llcp.  48,  and  ( in  Scotland )  Sutherland  v.  Sun  Fire,  24  Scot. 
Jur.  440,  14  C.  S.  C.  (2nd  scries)  T75. 

(b)  Home  Innuranre  v.  Thompson,  1  U.  C.  (Err.  &  App  )  247. 

(c)  Anderson  v.  Commercial  Union  Assurance.  56  L  J.  Q.  B.  140,  84  W.  R. 
189.     M  ,S'.  W.  Hank  v  Roy<d  Ins.  Co.,  2  N.  Z.  (Sup.  Ct.)  337. 

{d)  4  L.  J.  O.  8.  Ch.  47.    Reported  also  0  Mooro  (J.  P.  202  note. 

(c)  See  also  lirotm  v.  lioi/at,  1  E.  &  E.  813,  83  1.  T.  134  7  W.  R.  479,  28  L. 
J.  Q.  B.  275,  6  Jur.  N.  &.  1255.  Hall  v.  WHght,  E.  B.  &  E.  746.  Pollock  on 
contracts,  870  (8rd  ed.). 

213 


m 
(fit 


Mi 


*258 


THE   LAWS  OF  INSURANCE. 


compensation  for  the  injury  sustained  by  reason  of  the  inferior 
value  of  the  premises  erected  by  the  company.  In  that  case,  the 
Vice-chancellor,  said :  "  The  insurance  company  acted  under  a 
mistake  when,  instead  of  paying  the  sum  insured,  they  elected  to 
rebuild  the  premises.  Insurers  must  put  property  in  statu  quo,  or  pay. 
They  could  not  place  their  property  in  the  same  situation  as  that 
in  which  it  was  before  the  fire.  The  Building  Act  pre- 
[*  257]  vented  them  doing  so.  In  truth,  therefore,  they  *had  no 
option:  they  ought  to  have  paid  the  money''  (/).  In 
America  election  to  rebuild  is  held  to  amount  to  a  contract  to  re- 
build (.7),  C).  . 

If  the  insurers  do  not  reinstate  properly,  the  assured  is  not  bound 
to  accept  the  building.  They  cannot  put  up  what  they  like  in  lieu 
of  the  building  destroyed,  but  must  put  it  up  as  it  was  before  (h). 

Fire  during  reinstatement, — If  they  do  elect  to  reinstate,  and  a  fire 
occurs  during  reinstatement,  it  would  seem  that  the  company  are 
their  own  insurers  till  the  reinstatement  is  complete,  and  must 
commence  reinstating  de  novo,  and  cannot  charge  the  assured  with 
the  cost  of  the  second  fire  (i).  And  even  if  this  were  not  so,  in 
cases  of  partial  destruction  the  insurers  would  still  be  liable  for  the 
balance  of  the  amount  insured  and  not  expended  in  reinstatement. 

Assured  cant  rebuild  and  claim  against  company. — If  the  insurers 
do  elect  to  reinstate,  the  assured  cannot  refuse  to  let  them  do  so 
and  rebuild  himself,  and  claim  against  them  n).  They  have  the 
right  eo  to  elect  under  the  statute  or  policy,  or  both.  This  applita 
equally  to  insurance  on  chattels  (k). 

Allowance  new  for  old. — In  America  no  allowance  new  for  old  is 
permitted.    In  Ireland  the  contrary  seems  to  have  been  decided  (/). 

Agreement  between  landlord  and  tenant  as  to  rebuilding. — If  a  land- 
lord effect  an  insurance,  and  there  is  a  collateral  agreement  between 
him  and  the  tenant  that  he  shall  apply  the  insurance-money  in  re- 
building the  premises,  such  an  agreement  will  be  good  without  any 
new  consideration  on  the  tenant's  part  beyond  his  accept- 
[*  258]  ance  of  the  lease,  and  probably  without  being  *j)Ut  into 

(/)  Seo  Brady  v.  North- Wester ti  Insurance  Co  ,  11  Mich.  425. 

(g)  Morell  v.  Irnng  Instirance  Co.,  83  N.  Y.  429.  Soe  also  Ryder  v.  Com- 
monwealth, 52  Barb.  (N.  Y.)  447.  Times  Co.  v.  Hawke,  1  F.  &  F.  40G,  28  L  J. 
817. 

(A)  Alleyn  v.  La  Compagnie  de  Quebec,  11  Lr.  Can.  Rep.  894. 

(i)  Smith  V.  Colonial,  0  Victoria  L.  R.  200. 

(j)  Beats  V.  Home  Insurance  Co  ,  80  N.  Y.  5'i2. 

{k)  Anderson  v.  Commercial  Union,  55  L.  J.  Q.  B.  140,  34  W.  R.  189. 

(l)  Brinley  v.  National,  52  Muss.  (11  Met.  195.  Vance  v.  Foster,  1  Ir.  Circ. 
Rep.  47-51. 

(')  Company  elected  to  repair  partial  loss  to  frame  bnildinj^,  after  election  city 
ordinance  prohibited  erection  of  frame  buildings,  uo  lo  :'c]mir  company  would 
have  been  obliged  to  use  moro  expensive  niatcriuls.  Held,  there  was  no  exciisi; 
for  not  repairing,  and  the  owner  being  obliged  himself  to  repair  with  brick,  could 
recover  the  cost  together  with  damiig(!S  for  delay,  including  tho  rental  valuu. 
Philada.  IHre  Assn.  v.  Jioaenthal,  lOB  Pa.  St.  474. 

2U 


REINSTATEMENT. 


*  258 


writing  (0)  ^"^  *^®  landlord  would  thereby  be  under  an  obligation 
to  apply  the?  proceeds  of  the  said  policy  towards  reinstatement. 

EMion  to  reinstate. — The  effect  of  an  election  to  reinstate  is  to 
make  a  contract  to  reinstate,  and  to  put  the  insurer  into  the  same 
position  as  if  he  had  originally  contracted  to  do  so.  If  reinstating 
is  at  the  time  of  election  lawful  and  possible,  but  subsequently 
becomes  impossible,  the  insurers  will  be  liable  in  damages  as  for 
breach  of  a  contract  to  reinstate  (m). 

Order  by  assured  on  insurers  to  pay  third  person. — Acceptance  by 
the  insurer  of  an  order  by  the  assured  to  pay  the  loss,  if  any,  to  a 
third  person  will  not  affect  the  right  statutory  or  contractual  of  the 
insurer  to  reinstate,  such  order  operating  merely  as  an  assignment 
of  the  claims  of  the  assured  under  the  contract  (n). 

Election. — But  if  the  insurers  once  agree  to  pay,  their  election  to 
reinstate  is  gone,  and  they  will  not  subsequently  be  allowed  to  ex- 
ercise it  (o). 

(0  Pollock  Contracts  380  (3rd  ed.)- 

(m)  Brown  v.  lioyal  Insuranve  Co.,  above  cited,  Erie,  J  ,  dissenting. 

(n)  Tolman  v.  Manufacturers^  Insurance,  55  Mass.  (1  Cush.)  73. 

(o)  Scottish  Amicable  Association  v  Northern  Assurance,  9.1  Sc  L.  R.  189, 
11  C  S.  C.  (4th  series)  287.  And  see  N.  S.  W.  Bank  v*  Royal  Ins.  Co.,  2  N. 
Z.  (Sup  Ct)837. 


215 


■ii  (i 


,ar^^ 


Jki^ 


*260 


THE  LAWS  OF  INSURANCE. 


[*259] 


♦CHAPTER  XIII. 


BE-INSURANCE. 


Insurer  has  sufficient  insterest  to  re-insure. — A  contract  to  insure  (a) 
gives  the  insurer  an  insurable  interest  which  will  support  a  re-insur- 
ance (6)  to  the  full  amount  of  his  liability  on  the  original  policy. 
French  authorities  hold  that  his  interest  is  less  than  that  of  the 
assured  by  the  amount  which  he  has  received  in  premium,  since 
that,  having  been  received,  is  not  at  risk  (c).  But  tne  real  question 
is  not  what  has  been  received,  but  what  may  have  to  be  paid.  If 
the  assured  has  no  insurable  interest  his  insurer  has  none  to  re-in- 
sure (d). 

Nature  of  re-insurance. — Re-insurance  is  only  a  modification  of 
the  contract  of  insurance,  and  such  as  is  within  the  powers  of  a  com- 
pany authorized  to  make  contracts  of  insurance.  It  is,  in  fact,  in- 
surance by  the  first  insurer  of  his  interest  in  the  risk  created  by  his 
contract  to  insure  (e).  Like  the  original  contract,  it  insures  the 
goods,  buildings,  or  lives  first  insured,  though  the  interest  in  the 
two  insurances  differs  (/).  Where  a  form  of  insurance  is  idtra 
viresy  the  same  applies  to  that  form  of  re-insurance  (g) ;  and  it  may 
therefore  be  doubted  where  a  corporation  not  authorized  to  take 
marine  risks  could  re-insure  a  marine  risk  against  fire  {h). 
[*  260]  ^Company  being  wound  up  unable  to  re-insure. — A  com- 
pany for  whose  winding  up  an  order  has  been  made  cannot 
efiect  any  more  policies,  whether  of  insurance  or  re-insurance.  In 
such  a  case  re-insurers  by  any  policy  would  probably  not  be  bound 
to  do  more  than  return  the  premiums,  if  any,  paid  to  them  (h). 

Assured  not  privy  to  re-insurance. — The  contract  being  between  the 
reinsured  and  the  reinsurer,  the  assured  has  nothing  to  do  with  it 
except  80  far  as  it  guarantees  him  against  default  by  his  own  in- 

(o)  Mackenzie  v.  Whitworth,  45  L.  J.  Ex.  288,  L.  R.  1  Ex.  D.  86,  38  L.  T.  N 
S.  655,  24  W.  R.  287. 

(6)  New  York  Bowery  v.  New  York  Fire,  17  Wend.  (N.  Y.)  859.  Mutual 
Safety  Co.  v.  //one,  2  N.  Y.  (Comstock)  285. 

(c)  Pothier,  par  Dupin,  vol.  4,  p.  450  (1885  ed.). 

(a)  Colonial  Insurance  Co.  v.  Adelaide  Marine  Co.,  12  App.  Cas.  185. 

(e)  Uzielli  v.  Boston  Insurance  Co.,  15  Q.  B.  D.  17. 

{/)  New  York  Bowery  v.  New  York  Fire,  17  Wend.  (N.  Y.)  859.  Crowley  v. 
Cohen,  8  B.  &  Ad.  488,  per  Patteson,  J. 

{a)  Same  case.  1  L.  J.  N.  S.  K.  B.  158. 

(h)  Imperial  Marine  v.  Fire  Insurance  Corporation,  4  C.  P.  D.  106,  48  L.  J. 
C.  P.  424, 40  L.  T.  N.  S.  166,  27  W.  R.  080. 

(A)  CarringioH  v.  Commercial  /We,  14  N.  Y.  Sup.  Ct.  (1  Bosw.)  152. 

2t6 


BE-INSURANCE. 


261 


surer  (the  re-inFured),  and  he  cannot  sue  on  it  (t).*  But  iho  r6-in- 
Burer's  liability  would  be  discharged  by  payment  to  the  assured  of 
the  amount  of  his  loss.  In  America  liability  of  reinsurer  not  affected 
by  insolvency  of  re-insured, — And  in  America,  but  not  it  seeins  in 
England,  the  financial  condition  of  the  re-insured  is  not  to  be  taken 
into  account  in  the  computation  of  the  amount  to  be  paid  on  a  pol- 
icy of  re-insurance,  nor  is  insolvency  of  the  re-insured  any  defence 
to  an  action  thereon  (k).  Unless  provided  for. — But  special  excep- 
tion may  be  made,  excluding  this  rule  (l).  And  the  words,  "  to  pay 
as  may  be  paid  thereon,"  would  seem  to  exclude  liability  in  case 
the  re-insured  is  insolvent.  The  result  of  the  American  view  is 
to  make  a  policy  of  re-insurance  in  the  absence  of  special  stipula- 
tion a  guarantee  of  the  solvency  of  the  insurer  in  favour  of  the 
assured,  who,  ex  hypothesiy  is  not  privy  to  it. 

English  view  of  re-insurance  is  indemnity'  --In  England,  however,  a 
policy  of  re-insurance  on  a  life  is  essentially  a  contract  of  indem- 
nity, even  independently  of  any  terms  contained  therein  or  in- 
dorsed thereon.  Consequently  nothing  is  payable  to  the  re-insured 
company  until  proof  be  given  by  it  that  the  sum  originally  insured 
has  actually  been  paid  (m). 

Assured  nas  no  lien  on  re-insuring  policy. — The  person  in- 
Bured  under  the  original  policy  cannot  *claim  any  lien  on  [*  261] 
the  re-insuring  policy,  and  if  the  reinsured  company  be- 
comes insolvent,  the  amount  of  the  re-insuring  policy,  if  paid,  must 
go  in  with  its  other  assets,  and  the  original  policy-holder  can  only 

Set  a  dividend  if  those  available  for  the  purpose  of  his  policy  are 
eficient  (»). 
What  undertaken  by  re-insurer. — ^A  policy  of  re-insurance  is  an 
agreement  by  way  of  complete  or  partial  indemnity  to  the  insurer 
on  the  original  policy  (o).  It  presupposes  an  insurance  effected ,  and 
the  liability  of  the  re-insurer  is  contingent  on  the  liability  of  the  in- 
surer, as  re-insurance  is  really  a  contract  to  shift  liability,  and  its 
subject  is  the  risk  incurred  by  the  re-insured  (p). 

It  is  not  necessary  for  a  re-insurer  to  take  the  whole  risk,  or  the 
whole  amount  at  risk.    Thus  a  marine  insurer  against  all  perils  of 

(tj  Ibid. 

(k)  Caahau  v.  North-Western  Insurance  Co.,  6  Bissell  (C.  Ct.  T.  U.  S)  470. 

(l)  1  Emcrigon,  par  Boulay-Paty,  ch.  8,  s.  14. 

(m)  Re  Athenceum  Life.  Ex  inirte  Prince  of  Wales  Assurance  Co.,  1  Johns. 
633,  28  L.  J.  Ch.  885,  82  L.  T.  195,  7  W.  R.  187,  6  Jur.  N.  S.  883. 
(n)  Carrington  v.  Commercial  Fire,  14  N.  Y.  Sup.  Ct.  (1  Bosw.)  152. 

(o)  Joyce  V  Realm  Co.,  L.  R.  7  Q.  B.  580,  580,  per  Lush,  J.  Insurance  Co. 
V.  Insurance  Co  ,  4U  Am.  Rep.  418.     IJzielli  v.  Boston  Co.,  15  Q  B.  D.  11. 

(;))  Mutual  Safety  \.  Hone,  2  N.  Y.  (Comstock)  235. 

'  The  A.  companv  8nld  out  its  business  to  the  B.  company.  In  consideration 
thereof  the  B  re-i;.uiired  the  A  compony's  risks,  ond  ngreo  to  pay,  satisfy  and  dis- 
charge the  losses.  Hold  that  this  was  more  than  a  more  rc-insurance,  and  that 
there  was  sufficient  privity  between  a  policy-holder  and  the  B  company  to  enable 
tho*former  to  maintain  an  action  against  the  latter  for  a  loss.  Johannes  v.  Phenim 
Ina.  Co.f  C6  Wis.  60  S.  C.  67  Amer.  Rep.  240. 

217 


I 


i 


f 


iur 


' 


*262 


THE   LAWS  OP   INSURANCE. 


the  sea  can  re-insure  against  fire  only  (r/),  and  keep  the  rest  of  the 
risk  on  his  own  shoulders. 

Proportion  payable  by  re-insurer  of  one  of  several  concurrent  or  suc- 
cessive policies. — When  insurers  grant  two  policies  on  the  same  pro- 
perty, the  total  amount  of  them  being  greater  than  the  value  of  the 
property  insured,  and  subsequently  they  re-insure  on  one  of  such 
policies  only,  the  amount  of  the  re-insurer's  liability  will  depend  on 
whether  the  insurers'  policies  are  concurrent  or  successive  (r).  If 
the  insurances  are  concurrent,  the  re-insurer  will  have  to  pay  such 
proportion  of  the  whole  loss  as  is  equal  to  the  proportion  which  the 
re-insurer's  policy  bears  to  the  whole  sum  insured.  Thus  if  goods 
of  the  value  of  £1200  are  insured  to  the  amount  of  £1500  by  two 
policies  for  £1000  and  £500 respectively,  and  thelattor  policy 
[*  262]  only  is  re-insured,  the  re-insurer  will  have  to  pay  £400.  *lf, 
however,  the  insurances  are  successive,  and  the  second  policy 
is  re-insured,  the  re-insurer  will  have  to  (so  far  tis  the  sum  re-in- 
sured suffices)  the  amount  remaining  of  the  loss  after  the  first  policy 
has  been  fully  applied  in  satisfying  it.  E.  g.,  if  goods  of  the  value 
of  £1200  are  insured  by  two  policies  successively  for  £1000  and 
£500,  and  the  latter  policy  only  is  re-insured,  after  the  appropria- 
tion of  the  policy  first  applicable,  viz.,  the  £1000  policy,  there  will 
only  remain  £200  to  be  paid  by  the  re-insurer  in  respect  of  the  £500 
policy. 

Effect  of  condition  "  to  pay  as  may  be  paid." — A  re-insurance  subject 
to  all  clauses  and  conditions  in  the  original  policy  and  to  pay  as 
may  be  paid  thereon,  attaches  when  the  original  policy  attaches 
(s).  In  such  a  policy  payment  would  seem  at  first  sight  a  condi- 
tion precedent  to  the  right  of  suit  thereon.  But  the  true  construc- 
tion nas  been  held  in  America  to  be,  that  it  is  meant  to  make  the 
re-insurer's  liability  co-extensive  with  the  liability,  and  not  with 
the  ability  to  pay,  of  the  insurers,  and  that  the  re-insuring  company 
is  to  have  the  benefit  of  any  deduction  by  reason  of  other  insurance 
or  salvage  that  the  original  company  would  have  (t). 

Condition  to  pay  pro  rata. — A  condition  to  pay  pro  rata  at  and  in 
the  same  time  and  manner  as  the  re-insured,  cannot  amount  to  a 
provision  that  iflhe  re-insured  is  insolvent  there-insurer  is  only  to 
i> .  "  amount  of  the  dividend  on  the  particular  insurance  avail- 
i ; . .  the  assets  of  the  re-insured.  The  condition  only  means 
ih ,  ,  insurer  shall  only  pay  at  and  in  the  same  time  and  man- 
p!  1  :'>r  "--Insured  shall  pay  or  be  bound  to  pay,  and  that  the  re- 
^  ':'  *  have  all  the  advantages  of  the  time  and  manner  of 
payment  in  the  first  policy  (u). 

iq)  Imperial  Marine  v.  Fire  Insurance  Corporation.  4  C.  P.  D.  IGO,  48  L.  J. 
C.  P.  434,  40  I.  T.  N.  S.  160,  U  W.  R.  680. 

(>•)  Union  Marine  Co.  v.  Martin,  86  L.  J.  C.  P.  181. 

(s)  Joyce  V.  licalm  Co.,  L.  R.  7  Q.  B.  080. 

(0  Ex  parte  Norwood,  8  Bissell  (C  Ct.  U.  S.)  504,  518. 

(m)  Canhau  v.  North- Western  Insurance  Co.,  5  Bisscl  (C.  Ct.  U.  S.)  470.    'In- 
surance Co.  V.  Insurance  Co.,  43  Am.  Rep.  418. 

218 


RE-INSURANCE. 


*264 


'In- 


The  practice  as  to  re-insurance  seems  to  be  to  insert  *a  [*  263] 
clause  in  the  policy  of  the  re-insurance,  that  if  the  re- 
insured pays,  his  BO  doing  shall  be  evidence  sufl&cient  to  enable  him 
to  recover  from  his  re-insurer  (a;).  Payment  by  insurer  enables  him  to 
recover  from  re-insurer.  French  rule. — And  it  would  seem  that  French 
re-insurers  inserted  a  clause  allowing  the  original  insurers  to  make 
bond  fide  a  voluntary  settlement  and  adjustment  to  be  binding  on 
the  reinsurers  (y). 

Re-insurer*  position  in  action  by  assured. — The  re-insured  will,  it 
seems,  be  entitled  to  recover  from  the  re-insurer  his  costs  of  defend- 
ing any  action  brought  by  the  assured  under  the  original  policy,  if 
the  re-insurer  does  not  on  notice  appear  and  defend  such  suit 

He  may  either  wait  until  judgment  or  proceed  at  once  against 
the  re-insurer;  and  pajrment  is  not  in  America  a  condition  prece- 
dent to  his  right  of  action  (a). 

But  where  the  reinsured  gave  the  re-insurer  notice  that  he  meant 
to  pay,  to  which  the  re-insurer  gave  no  response,  it  was  held  that 
the  reinsurer  could  still  raise  all  the  defences  open  to  the  original 
insurer  in  action  against  him  by  the  assured  (b). 

Proofs.  Conditions. — The  reinsured  must  of  course  in  some  way 
prove  the  character  and  extent  of  his  loss  (c),  and  must  fulfill  all 
the  conditions  of  his  re-insurance  (d).  But  it  has  been  held  in 
Canada  that  he  may  to  some  extent  waive  the  conditions  contained 
in  the  original  policy  without  defeating  his  recourse  to  his  re- 
insurer (e). 

Reinsxired  entitled  to  his  reasonable  and  necessary  costs. — The 
re-assured  is  entitled,  besides  the  a,mount  paid  *by  him  for  [*  2G4] 
the  loss  sustained  by  his  assured,  to  be  indemnified  by  his 
re-insurer  for  all  costs  and  expenses  reasonably  and  necessarily  in- 
curred by  him  to  protect  himself  and  entitle  him  to  recover  over 

(x)  So  stated  in  National  Marine  v.  Protector  Co.,  5  Victoria  L.  R.  226,  229. 

(y)  Pothier,  cited  in  New  York  State  Co.,  1  Story  Rep.  (U.  S.)  458. 

(2)  Hastie  v.  De  Peyster,  3  Cains  (N.  Y. )  190.  Henry  Rifle  Barrel  Co.  v. 
Employers'  Liability  Co.  ( 1884 ),  Q.  B.  D.  New  York  Central  v.  l*rotection 
Co.,  20  Barb.  (N.  Y.)  468. 

(a)  Hone  v.  Mutual  Safety  Co.,  8  N.  Y.  Sup.  Ct.  (1  Sandford)  137. 

(b)  National  Marine  v.  Halfey,  5  Victoria  L.  R.  226.  New  York  State  v. 
Protector  Insurance  Co.,  1  Story  Rep.  (U.  S.)  458.  See  M'Kemie  v.  }Vhitworth, 
1  Ex.  1).  86,  83  L.  T.  N.  S.  655,  24  W.  R.  287,  45  L.  J.  Ex.  233.  Joyce  v. 
Bealm  Co ,  L.  R.  7  Q.  B.  580. 

(c)  Yonkers  Fire  Co.  v.  Hoffman  Fire  Co.,  6  Robertson  (Louis)  316. 

(d)  New  York  Central  v.  National  Protection,  20  Barb.  (N.  Y.)  468. 

(e)  Fire  Association  v.  Canada  Co.,  2  Ontario  48t. 

*  The  A.  company  re-insured  in  the  B.  company.  The  A.  company  was  sued, 
and  the  two  companies  Berimed  that  the  case  should  be  fought,  the  A.  company  to 
control  the  defence.  Without  the  consent  of  B.,  case  was  compromised.  Hold 
lha,t  B.  was  not  liable  to  A.  for  any  part  of  money  paid  by  way  of  comproiniso. 
Commercial  Union  Assurance  Co.  v.  American  Central  Ins.  Co.,  68  Cal.  480. 

21U 


,)'i;' 


y..:.-\X% 


hVMpi'    Ml 


V-lk 


265 


THE    LAWS  OF  INSURANCE. 


against  the  re-insurer.    But  if  in  a  clear  case  of  loss  he  defends 
without  reason,  he  will  not  get  his  costs  (/). 

Meaning  of  contribution  clause  in  re-insurance  policy. — If  a  contract 
of  re-insurance  contains  a  contribution  clause,  such  clause  will,  in 
the  absence  of  specific  words,  be  taken  to  refer  to  a  case  of  double 
re-insurance  only,  and  a  custom  for  reinsurers  to  pay  only  such 
proportion  of  the  loss  as  the  amount  re-insured  bears  to  the  origi- 
nal  policy  will  not  be  admitted.  The  custom  suggested  in  the  case 
below  cited  (g)  was  that,  if  partial  re-insurance  were  effected,  the 
insurer  should  only  pay  in  full  in  case  of  a  total  loss,  and  in  a  par- 
tial loss  should  only  pay  proportionately  in  the  way  in  which  in- 
surers pay  under  an  average  clause.  If  the  contention  in  the  par- 
ticular case  had  succeeded,  the  re-insurer  would  have  made  what 
was  a  contribution  clause  work  as  an  average  clause,  and  have 
penalized  the  re-assured  for  not  shifting  the  whole  of  his  liability. 

Condition  that  reinsured  should  retain  other  insurances. — A  condi- 
tion that  the  re-insured  should  retain  a  certain  sum  equal  to  the 
amount  re-insured  on  other  parts  of  the  same  property  only  means 
that  they  are  to  forbear  from  re-insuring  so  as  to  reduce  their  own 
risk  below  the  stipulated  amount,  not  that  they  must  guarantee 
the  continuance  of  existing  insurances.  So  if  the  insured  refuse 
to  renew  a  policy  of  which  the  re-insured  knows  nothing  till  after 
the  fire,  the  condition  is  not  violated.  To  construe  it  otherwise 
would  be  to  make  the  re-insured  go  on  insuring  against  the  will  of 
the  assured  (h). 

Where  reinsurance  part  of  original  risk,  that  retained  cannot  drop 

without  re-insurance  dropping. — Where  the  re-insurance  is  on 

[*  265]  part  of  the  original  risk,  *the  amount  retained  cannot  drop 

without  the  re-insurance  dropping  too.    So  that  the  original 

insurers  must  retain  the  part  stipulated  if  they  wish  to  keep  up  the 

re-insurance. 

But  where  the  amount  to  be  retained  is  a  separate  risk,  though 
involved  in  the  same  peril,  the  word  retain  will  not  be  construed 
as  a  guarantee  that  the  assured  will  keep  up  all  his  existing  poli- 
cies {i). 

Equal  good  faith  required  from  re-insurer  as  from  insured — The  re- 
insured must  show  as  good  faith  as  if  he  were  seeking  insurance, 
and  not  merely  re-insurance  (k),  as  the  latter  is  not  a  contract  of 
suretyship,  but  a  form  of  the  ordinary  contract  of  insurance  whereby 
a  person  who  has  guaranteed  the  safety  of  another's  goods  mav 
have  his  own  liability  under  the  first  guarantee  covered  by  a  second. 

Concealment. — Consequently,  if  information  possessed  by  the  re- 
insured and  material  to  the  risk  be  not  communicated  to  the  re-in- 

(/)  Kew  York  State  Co.  v.  Protector  Co ,  1  Story  Rep.  (U.  S  )  458,  where 
Story,  J.,  cites  the  jurists. 

(g)  Mutual  Safeti/  Co.  v.  Hone,  2  N.  Y.  (Comstock)  235.  See  Union  Marine 
V.  Martin,  85  L.  J.  C.  P.  181. 

ih)  Canada  Insur.  Co.  v.  Northern  Insur.  Co.,  2  U.  C   (App  )  878. 

(t)  Canada  Insurance  Co.  v.  Northern  Insurance  Co.,  2  U.  C.  (App.)  878. 

Ik)  New  York  liowery  v,  Neva  York  Fire,  17  Wend.  (N.  Y.)  869. 

220 


RE-IXSURAXCE. 


*266 


surer  the  policy  of  re-insurance  will  be  void.  Re  insured  must  state 
to  re-insurer  what  he  knows  of  a^sured^s  character. — In  some  cases, 
therefore,  a  heavier  obligation  to  disclose  may  fall  upon  the  person 
seeking  reassurance  than  on  his  assured.  Besides  the  information 
given  by  the  latter,  the  former  may  at  the  time  when  granting  the 
original  policy,  or  subsequently,  learn  material  facts  as  to  the  risk, 
and  these  he  must  disclose  on  seeking  re-insurance.  Thus,  though 
the  original  assured  would  not  be  bound  to  give  himself  a  bad 
character  to  his  insurer's,  such  insurer's  would,  if  seeking  re -insur- 
ance, be  bound  to  disclose  what  they  knew  of  him  (I),  whether 
learnt  before  or  after  they  granted  the  original  policy. 

Whether  policy  should  be  stated  to  be  a  re-insurance. — When  re-in- 
surance is  made  it  is  not  necessary  to  disclose  the  fact  that  the 
policy  is  by  way  of  re-insurance  unless  such  fact  is  ma- 
terial (to).  It  seems  to  be  *usual  to  declare  that  re-insur-  [*  266] 
ance  is  sought  if  such  be  the  fact,  but  there  is  no  custom  in 
marine  insurance  to  that  effect;  for  marine  re-insurance  was  illegal, 
with  certain  exceptions,  till  1864  (rt). 

Misrepresentation  by  re  insured  as  to  risk  retained  by  him. — Misrep- 
resentation by  the  re-insured  will  avoid  the  policy.  Thus  where 
one  company  re-insured  part  of  its  risk  on  a  life,  stating  that  an- 
other portion  would  be  retained,  but  parted  with  the  rest  before  the 
first  re-insurance  was  completed,  the  contract  was  avoided  (o). 
But  representations  as  to  the  nature  of  the  risk  will  not  help  a  re- 
insurer who  has  formed  his  own  judgment  of  the  nature  of  the 
risk  (p). 

Notice  to  be  given  by  re-insured  of  other  insurances. — The  re-insured 
must  also  give  notice,  if  required,  of  other  insurance  on  the  prop- 
erty if  he  knows  of  it  (^).  In  the  case  below  cited  the  insurance 
was  effected  on  an  ordinary  policy  with  re-insure  substituted  for 
insure. 

Condition  that  reinsured  may  recover  within  specified  time  after  loss. — 
It  would  seem  that  if  the  re-insurer's  policy  stipulates  that  the  re- 
assured may  recover  thereon  within  a  certain  time  after  the  loss, 
such  time  will  run  from  the  injury  to  the  property,  and  not  from 
payment  under  the  original  policy  by  the  reinsured  (r). 

Condition  as  furnishing  proof  satisfied  by  transmitting  proofs  received 
from  assured. — If  the  insurance  policy  contains  a  condition  that  the 

(1)  Ibid.     Sun  Mutual  v.  Ocean  Co  ,  107  U.  S.  (17  Otto)  455. 

(m)  M'Kenzie  v.  Whitworth,  2  Ex.  D  36,  46  L.  J.  Ex.  233,  33  L.  T.  655,  24 
W.  R  287 

(n)  19  Geo  II.  c.  87,8.  4. 

(())  Foster  v.  Mentor  Life,  3  E.  &  B,  48,  23  L.  J.  Q  B.  145,  22  L.  T.  305. 
Traill  v.^Iiarinff,  33  L.  J  Ch.  521,  4  Giff.  486,  10  L.  T.  N  S.  215, 12  W.  R.  678. 
Louisiana  Mutual  Fire  Co.  v.  New  Orleans  Co.,  13  Louis  Ann.  240.  But  see 
Prudential  Co.  v.  Etna  Co  ,  28  Blatch.  (U.  S.  Circ  Ct.)  228. 

(p)  Canada  Ins.  Co.  V.  Northern,  2  \J  C   (App.)373. 

(q)  Neuj  York  Bowery  v.  New  York  Fire,  17  Wend.  (N.  Y.)  359. 

(r)  Provindal  Co.  v.  Etna  Co.,  16  U.  C.  (Q.  B.)  145. 

m  . 


X  ! 


ls.:;i 


*266 


THE  LAWS  OP  INSURANCE. 


parties  assured  shall  furnish  certain  specific  proofs  as  to  their  char 
acter,  circumstances,  and  loss,  such  condition  is  complied  with  iu 
contemplation  of  law,  if  the  party  originally  insured  furnishes 
such  proof  to  his  immediate  insurers,  and  they  transmit  the  same 
to  their  re-insurers  («). 


(s)  New  York  Bowery  v.  Neio  York  Fire.  17  Wend.  (N.  Y.)  359.    Ex  nnria 
Norwood,  3  BisseU  (C.  Ct.  U.  S.)  604.  *^  "* 


OBUGATION  OF  TENANTS  TO  INSURE. 


*268 


♦CHAPTER  XIV. 


OBLIGATION  OF  TENANTS  TO  INSURE. 


[*  267J 


Tenant  jor  life  or  in  tail  need  not  insure. — A  tenant  for  life  or  a 
tenant  in  tail,  if  the  settlement  contains  no  provision  or  obligation 
as  to  the  repair  or  insurance  of  buildings  on  the  settled  estates,  is 
not  bound  to  insure  or  to  reinstate  in  case  of  fire  (a). 

When  entitled  to  'policy-money. — And  if  such  a  person  insures,  pay- 
ing the  premiums  out  of  his  own  pocket,  he  has  been  held  entitled 
to  the  policy-moneys  as  against  the  remainderman  (6).  Tenant  in 
tail.  Remainderman.  Proceeds  of  policy. — This  was  first  decided  in 
the  case  of  Seymour  v.  Vernon,  the  facts  of  which  were  that  some 
stables  were  burnt  down,  and  it  was  thought  needless  and  inex- 
pedient to  rebuild  them.  The  Court  had  previously  ordered  the 
insurances  to  be  kej)t  up  by  a  receiver  for  the  benefit  of  all  parties 
who,  in  the  result  of  the  decision  of  the  Court  in  the  administration 
suit,  should  be  found  entitled.  And  Kindersley,  V.  C,  held  that, 
inasmuch  as  the  premiums  had  been  paid  out  of  the  income  of  the 
infant  tenant  in  tail,  the  policy-moneys  were  his.  This  case  was 
followed  and  approved  by  Chitty,  J.,  in  Warwicker  v.  Bretnall  (c), 
where  a  mill  comprised  within  a  strict  settlement  under  a  will 
had  been  insured  on  account  of  an  infant  tenant  in  tail  out  of  the 
rents  of  the  estate,  and  had  been  burnt  down.  The  proceeds  of  the 
policy  were  insufficient  for  rebuilding,  and  it  was  not 
thought  for  the  benefit  of  any  one  interested  in  the  *settled  [*268] 
estates  that  the  mill  should  be  rebuilt.  The  learned  judge 
held  that  the  policy-moneys  belonged  to  the  infant  tenant  in  tail  as 
part  of  his  personal  estate,  and  were  not  to  be  treated  as  part  of  the 
real  property  comprised  in  the  settlement. 

Warwicker  v.  Bretnall  discussed. — With  the  greatest  respect  and 
deference  for  those  learned  judges,  it  seems  that,  if  their  decisions 
are  correct,  a  limited  owner  may  insure  settled  property  for  its  full 
value,  and  in  case  of  fire  appropriate  to  his  own  use,  not  only  so 
much  of  the  insurance-money  as  is  equivalent  to  the  value  of  his 
own  limited  interest,  but  also  the  balance  which  represents  the  value 
of  the  interests  in  remainder.  This  appears  to  be  opposed  to  the 
view  expressed  by  Lord  Justice  Bowen  (d),  who  says :    "A  p^^rson 

(a)  Rayner  v.  Preston,  18  Ch.  D.  1,  60  L.  J.  Ch.  472,  44  L.  T.  N.  S.  487,  29 
W.  R.  547.    6  Anne,  c.  58  (81  RuflP.) ;  14  Geo.  III.  c.  78,  s.  83. 
(6)  Sevmour  v.  Vernon,  21  L.  J.  Ch.  488,  16  Jur.  189. 

(c)  23  Ch.  D.  188  ;  see  also  81  W.  R.  520. 

(d)  CasteUain  v.  Preston,  11  Q.  B.  D.  880,  62  L.  J.  Q.  B.  376,  49  L.  T.  N.  S. 
29,  81  W.  B.  667. 

228 


I  I  r. 


'r   \ 


270 


THE  LAWS  OF  INSURAN'CE. 


with  a  limited  interest  may  insure  either  for  himself,  to  cover  his 
own  interest  only,  or,  if  he  so  mean  at  the  time,  he  may  insure  so 
as  to  cover  not  only  his  own  limited  interest,  but  the  interest  of  all 
others  who  are  interested  in  the  property.  It  is  a  question  of  fact 
what  is  his  intention  when  he  makes  the  policy.    But  he  can  only 

hold  for  so  much  as  he  intended  to  insure There  is  the 

case  of  a  mortgagee :  if  he  has  not  the  le^al  ownership,  hb  is  entitled 
to  insure  for  the  whole,  but  even  if  he  is  not  entitled  to  the  legal 
ownership,  he  is  entitled  to  insure  primd  facie  for  all.  If  he  intends 
to  cover  only  his  own  mortgage,  and  is  only  insuring  his  interest, 
he  can  only  retain  the  amount  in  which  he  has  been  indemnified. 
If  he  has  intended  to  cover  other  persons  besides  himself,  he  can 
hold  the  surplus  for  those  whom  he  has  intended  to  cover.  But  if 
he  intended  to  cover  himself  alone,  and  if  his  interest  is  limited,  he 
cannot  hold  anything  beyond  the  amount  of  the  loss  caused  to  his 
own  particular  mterest."  If  the  decisions  in  Seymour  v. 
[*  269]  Vernon  and  Warwicker  v.  Bretnall  are  *good  law,  it  is  submit- 
ted that  one  class  of  limited  owners — viz.,  the  tenant  in  tail, 
must  be  excepted  from  what  the  Lord  Justice  says;  and  a  tenant  in 
tail,  insuring  all  person  interested,  may  receive  and  retain,  not  only 
so  much  of  the  insurance-money  as  represents  the  value  of  his  own 
interest,  but  also  the  surplus  which  represents,  and  is  really  recov- 
ered in  respect  of,  the  interest  of  other  parties.  Even  if  the  great 
authority  of  the  learned  Lord  Justice  did  not  seem  to  shake  the  de- 
cisions in  Seymour  v.  Vernon  and  Warwick  v.  Bretnall,  the  considera- 
tions we  have  mentioned  would  make  these  decisions  appear  to  us 
far  from  convincing  or  conclusive.  There  may  be  difficulty  in  es- 
timating the  proportion  of  the  insurance-money  payable  to  the  ten- 
ant in  tail ;  but  why  should  the  whole  insuraiice-mor-ay  be  treated 
as  realty  and  come  under  the  settlement  in  lieu  of  the  property  de- 
stroyed? This  would  avoid  all  the  difficulty  of  apportioning,  and 
protect  the  rights  of  all  parties. 

Opinion  of  Mr.  Davidson. — Mr.  Davidson  (e)  says  "  that,  in  the 
absence  of  special  contract  or  obligation,  the  tenant  for  life  is  not 
bound  to  repair  or  rebuild  in  case  of  fire,  and  by  parity  of  reason- 
ing is  not  bound  to  insure,  yet  it  seems  that  if  he  is  not  insured  he 
would  be  bound  to  lay  out  the  money  in  rebuilding." 

Tenants  for  years  not  bound  to  inmre. — Tenants  for  years  are  not  at 
Common  Law  bound  to  insure.  Their  legal  duty,  in  the  absence  of 
special  agreement,  is  merely  to  use  the  demised  premises  in  a  proper 
and  tenantable  manner,  and  includes  no  obligation  to  reinstate  in 
case  of  fire  (/).  It  is  true  that  the  statute  of  Gloucester  seems  to 
have  been  construed  so  as  to  make  them  liable  in  case  of  a  fire 
[*  270]  if  accidental,  *as  for  permissive  waste  if  negligently  caused, 
or  for  voluntary  waste  {g). 

(e)  Precedents  Conv.  vol.  8,  pt.  1  (8rd  ed.),  p.  290  note  (c). 
(/)  Ibid.  vol.  5,  pt.  1  (3rd  ed.),  542  note  (a).   Sugden  Handy  Book  194  (8th  ed.). 
\g)  6  Ed.  I.  (a.  d.  1278),  see  Davidson,  I.  c    Hamilton  v.  Mendes,  2  Buir. 
1211  (1761),  per.  Lord  Mansfield.    TurbervU  v.  Stamp,  1  Salk.  18. 

224 


OBUGATION  OP  TENANTS  TO  INSURE. 


*271 


J^anU  not  liable  fur  accidental  fire. — But  by  14  Geo.  III.  c.  78,  s. 
86  (A),  in  the  absence  of  any  contract  or  agreement  with  the  land- 
lord they  are  exempted  from  all  liability  for  accidental  fires  "  oc- 
curring in  their  houses,  chambers,  stables,  bams,  or  estates,"  "  any 
law,  usage,  or  custom  to  the  contrary  notwithstanding." 

The  statute  is  mainly  loial,  but  this  and  some  other  sections  are 
general  (i).  The  history  of  the  section  well  illustrates  the  method 
of  legislation  in  this  country.  The  exemption  was  first  granted  as 
to  houses  and  chambers  only  in  1708,  by  6  Anne,  c.  58  (6,  7,  8) 
(Riifthead,  c.  31),  for  a  limited  period,  but  reyived  and  made  per- 
petuid  in  1710  by  10  Anne,  c.  24,  s.  1  (k). 

Hiatory  of  8.  83. — In  1772  it  was  repealed  and  re-enacted  in  the 
12  Geo.  III.  c.  73,  s.  46,  a  Metropolitan  Building  Act.  In  1774  it 
was  repealed  and  re-enacted  in  its  present  form  (^l),  except  the  pro- 
vision as  to  treble  costs,  which  has  been  repealed  by  the  Statute 
Law  Revision  Act,  1861,  while  the  rest  of  Geo.  III.  c.  78,  was  re- 
pealed by  28  &  29  Vict.  c.  90,  s.  34  (a  Metropolitan  Fire  Brigade 
Act),  which  s.  34  was  in  its  turn  repealed  by  the  Statute  Law  Re- 
vision Act  of  1785  (38  &  39  Vict.  c.  66).  Such  repeal  does  not,  how- 
ever, revive  the  repealed  portions  of  14  Geo.  III.  c.  78  (m). 

Tenant' 8  liability  for  fire  through  his  negligence. — Though  now  clearly 
not  liable.  ex:cept  by  contract,  for  accidental  fire,  a  tenant  for  years 
is  liable  ex  delicto  at  Common  Law  for  damage  done  by  a  fire 
caused  by  *his  own  negligence,  or  that  of  his  servants,  to  [*  271] 
the  property  of  his  neighbors  or  his  landlord  (n),  and  such 
liability  is  in  no  way  affected,  lessened,  or  varied  by  s.  86  of  14 
Geo.  III.  c.  78. 

May  insure  against  fire  through  negligence. — In  virtue  of  this  liabil- 
ity for  negligence  he  has  an  insurable  interest  in  the  premises  oc- 
cupied by  him,  and  he  may  lawfully  insJire  against  his  own  negli- 
gence (o). 

Protection  of  ordinary  policy. — Indeed,  an  ordinary  fire  policy  pro- 
tects against  own  or  servant's  negligence  (except  perhaps  the  very 
grossest),  or  accident?,  or  arson  by  others,  wherein  assured  has  no 
complicity  (p). 

Tenant's  liability  as  insurer,  how  created. — Landlord  and  tenant  may 


liichards 


(A)  This  Act  is  wholly  repealed,  except  this  section  and  s.  83. 

(t)  FHliterw  Phippard  (1847),  11  Q.  B.  347,  per  Denman,  C.  J. 
T.  Easio,  15  M.  &  W.  244. 

{k)  C.  14  (Ruff  head). 

[1)  Piatt  on  Covenants  188. 

(»0  Seel3&14  Vict,  c  21,8.  5. 

[n]  See  FiUiter  v.  Phippard,  11  Q.  B.  847.  See  Vanghan  v.  Menlore,  B  Bing. 
N  C.  468.  Turbervil  v.  f^tavip.  1  Salk.  13.  These  and  other  cases  bearing  on 
this  subject  are  ably  and  exhanstively  discussed  iri^  Furlong  \.  Carroll,  7  Ontario 
(App.)  145,  and  in  UilUard  v.  Thurston,  8  Ontario  ( App  )  614. 

(o)  Dobson  V.  Sotheb//,  1  Moo  &  Mai  00.  1)3,  per  Tenterden,  C.  J. 

iv)  Midland  Inmrance.Co.  v.  Smith,  6  Q.  B.  D.  561,  50  L.  J.  Q  B.  32<).  46> 
L  T.  N.S.  411,29  W.  R.  850. 


15  PORTER  ON  INSURANCE. 


225 


*272 


THE   LAWS  OP   INSURANCE. 


contract  that  the  latter  shall  be  liable  to  the  former  in  case  the  de- 
mised property  shall  be  destroyed  by  fire  (q). 

Tenant  under  covenant  to  repair  bound  to  reinstate. — A  tenant  who 
covenants  or  agrees  to  repair  generally  makes  himself  an  insurer, 
and,  if  the  demised  premises  are  burnt  down  within  his  term,  will 
be  bound  to  reinstate,  and  is  liable  in  damnges  if  he  does  not  do 
so.  I*;  does  not  matter  whether  the  fire  originated  in  or  spread  to 
the  demised  premises,  nor  how  it  was  caused  (r). 

Insurance.  Landlord  and  tenant. — A  covenant  by  the  tenant  to 
pay  any  extra  premiums  exacted  in  consequence  of  work  done  or 
business  carried  on  by  him,  seems  to  apply  to  the  ordinary  trade 
of  the  tenant,  and  not  to  special  acts  increasing  the  risk,  such  as 

netting  up  steam-engines,  &c.  (s), 
[*  272]  'WeoiseeJoT  life  when  an  insurer.  Liability  to  rebuild  of  lim- 
ited owner.— A.  devisee  for  life,  with  a  condition  against  com- 
mitting waste,  and  for  keeping  the  premises  in  good  and  tenanta- 
ble  repair,  is  under  the  same  liability  as  a  tenant,  bound  by  an 
absolute  repairing  covenant,  and  the  remainderman  can  make  him 
rebuild.  He  cannot  do  so,  however,  unless  such  liability  is  imposed 
on  him  by  the  settlement  under  which  he  holds  (t). 

Tenant  when  an  insurer.  Trustee  in  bankruptcy. — The  trustee  iu 
bankruptcy  of  a  tenant  is  in  the  same  position  as  the-  tenant  ?ave 
for  his  power  of  disclaiming  a  burdensome  tenancy  (?t)- 

Insurable  interest  of  tenant  under  covenant  to  repair. — The  tenant 
who  has  covenanted  " to  repair  and  keep  in  repair"  has  an  insura- 
ble interest  in  the  premises  sufficient  to  support  a  policy  in  his  own 
name  for  the  full  value  thereof.  Such  insurance  is  in  effect  a  re- 
insurance of  his  own  liability.  Positi  n  of  insurers  where  landlord 
and  tenant  insure  separately. — Consequently  if  the  landlord  insured 
too,  the  insurers  would  not  be  entitled  to  demand  contribution  in- 
ter se;  but  the  insurer  of  the  landlord  would  be  entitled  either  to 
gubrogation  to  the  landlord's  rights  on  his  covenant  against  the 
tenant,  or  to  return  of  the  policy  money  if  the  landlord  had  en- 
forced these  rights  («). 

Effect  of  'tenant  to  repair  and  to  insure  fixed  sum. — The  covenant 
to  repair  nii.kes  the  t«nant  an  insurer  to  the  full  value  of  the  prem- 
ises even  if  he  also  covenants  to  insure  for  a  fixed  sum.  The  latter 
covenant  h  a  collateral  security  to  the  landlord,  lessening  but  not 


(q)  14  Geo.  III.  c.  78,  s.  86. 

()•)  Ihillock  V.  Domitt  (17!t6),  6  T.  R  fi50.  Pi/in  v.  lilarklmrn,  n  Vcs.Jun.  'M. 
Chestfr/icM  v  Bolton.  2  Com.  027.  iJigby  v.  AtHumii,  4  Camp.  27.").  Ltuvln 
y.  Kemp,  2  C   &  P.  376. 

(,s)  J)iihc  of  Hamilton's  Truatecu  v.  Flcminff.  !)  C  S.  C  (iJrd  series)  a2!),  iiml 
also  Forhcs  v.  Border  Counties,  11  C.  8.  C.  (Sni  RcrioH)  278.  Piatt  v.  Knri/.  7 
Lr.  Can.  .lur.  80. 

(t)  He  Skbifflcf/.  3  M'N  &  O.  221,  per  Tniro,  C.  Greg>f  v.  Co(it<m,  2:5  Hcnv. 
83,  2  .Tur.  N.  [4.  9(14,  per  Romilly,  M.  It ,  4  W   II,  7:W, 

(u)  i(\  &  47  Vict.  e.  52,  s  55. 

(a:)  Darrell  v.  Tihbits,  5  Q.  B.  D.  6«0,  60  L.  J.  Q.  11.  33,  2<J  W.  U.  (S(J,  12  !-. 
T.  N.  S.  797. 

226 


OBLIGATIONS   OF  TENA.sTS   TO   INSURE. 


*274 


limiting  the  tenant's  liability,  as  he  remiiins  absolutely  liable  to  ra- 
instate  on  his  covenant  to  repair  (y). 

HffW  liability  as  insurer  is  excluded. — It  is  consequently  adv' sable 
to  exclude  from  the  covenant  to  repair  the  case  of  loss  or 
damage  by  fire.    "^By  so  doing,  the  tenant  removes  from  [;<^  273] 
himself  all  liability  as  an  insurer,  and  limits  his  ability  to 
the  case  of  breach  of  his  covenant  (if  any)  to  insun^  (x). 

Covenant  to  insure  runs  with  land. — A  covenant  to  insure  is  not  per- 
gonal, but  a  covenant  to  do  sometliing  in  respect  to  the  property 
demised,  and  is  available  to  as-signee s  (a)  of  the  reversion  against 
the  tenant  or  his  assignees  (h). 

Landlord  not  an  insurer.  Landlord  not  hound  to  rebuild. — The  land- 
lord is  never  in  England  an  insi.rer.  Ho  is  not  bound  at  Conmion 
Law  to  rebuild  in  case  of  fire;  in  fact,  he  cannot  enter  upon  the 
demised  premises  during  the  term  except  for  breaches  '^f  the  terms 
ofthe  lease,  and,  if  he  Went  in  to  rebuild,  would  be  a  mere  tres- 
passer. 

Tenant  cannot  compel  landlord  who  insures  to  rebuild. — If  the  land- 
lord insures  himself  against  any  risk  not  thrown  on  the  tenant  by 
the  contract,  and  a  fire  occurs,  the  tenant  has  no  equity  to  compel 
him  to  apply  the  proceeds  of  the  insurance  in  repair  of  the  dam- 
age (c).  Such  insurance  is  a  precaution  for  the  landlord's  own  ben- 
efit. He  alone  is  entitled  to  benefit  by  it,  and  there  is  no  privity 
hetween  the  tenant  and  the  insurer. 

Tenant  cannot  insist  on  landlord  reinstating  out  of  proceed'^  of  his 
policy. — If  the  landlord  has  covenanted  to  repair  the  part  burnt 
down,  the  tenant  can  only  sue  the  landlord  on  that  covenant,  and 
must  go  on  paying  his  rent  in  such  a  case  even  if  the  premises  are 
burnt  down  (a).  But  though  it  is  doubtful  if  he  has  the  power  to 
attach  the  policy-moneys  when  tiiey  have  once  reached  the  land- 
lord's hands,  and  roquire  them  to  be  employed  to  repair 
*the  damage  in  respect  of  which  they  were  paid,  he  can,  [*  274] 
as  a  person  interested  in  the  premises,  give  notice  to  the 
insurer  (e)  to  employ  them  townrds  reinstating  such  damage,  and 
in  that  way  obtam  what  he  seeks. 

The  laiv  of  Scotland. — "  The  law  of  Scotland  is  much  more  favour- 
able to  a  tenant  than  the  law  of  England.  In  England  it  appears 
to  be  the  rule  that  if  the  premises  let  should  be  wholly  destroyed 
by  fire,  the  tenant  must  continue  to  pay  rent  for  the  term  of  his 


(1815),  per  Ellotihorough,  C  J      Pmniall 

lf)9. 

See  the  covenants  in  Dan'ell  v.  TihbUsy 


(«)  Dicihi  V.  Atkinson,  4  Camp 
V.  Harlionie,  11  Q.  H.  3G8,  17  L.  .1.  Q.  li  U4.  i2Jui' 

(2)  IVcifiall  V.  Waters,  0  T.  R.  448. 
cited  supra,  p.  272. 

(fl)  Rullork  V.  Domitf,  C  T.  R.  050     44  &  45  Vict.  c.  41,  s.  10. 

(/;)  Douglas  v  Murphy  (1858),  1«  U.  C  (Q.  R)  110.     Vernon  v.  f^mith,  5  B. 
*  Aid   1.    'Doc  V.  (jladwin,  tf  Q.  H  »6H.     Pintt  on  Covenants  183,  180-lH'i. 

(v.)  Leeds  v  Chcetham  (i827),  i)ei*  Leach,  M.  R,  1  Sim.  140,  150,  50  Ji   J.  0 
S.  Ch.  105.     Loft  V,  Denis  (1855)).  28  L.  J.  Q.  13.  108. 

id)  IjCeds  V.  Vheetham,  1  Sim.  146. 


rtham,  1  Sim. 
(e)  14  Geo.  III.  c.  78,  s.  88. 


'.I 


227 


'.. 


*275 


THE  LAWS   OP  INSURANCE. 


lease.  In  Scotland  jimuch  more  reasonable  and  equitable  rule  pre- 
vails. If  the  premises  let  have  been  bo  destroj'ed  or  severely  dam- 
aged that  they  haVe  become  no  longer  fit  for  occupation  for  the 
purpose  for  which  they  were  let,  the  tenant,  being  deprived  by 
damnum  fatale  of  the  subject  for  which  lie  agreed  to  pay  rent,  is 
free  from  the  obligation  to  do  so.  This  equitable  rule,  however  ig 
subject  to  conditions,  one  of  which  is  that  the  part  destroyed  must 
be  essential"  (/). 

Covenant  to  insure  is  a  usual  covenant. — A  covenant  to  insure  is 
now  a  usual  covenant  in  a  lease,  which  a  landlord  is  entitled  to  have 
inserted  in  pursuance  of  i'n  agreement  to  take  a  lease  with  the 
usual  covenants.  And  the  lessee  cannot  demand  to  have  it  qual- 
ified by  an  exeniptictn  from  the  rent  if  the  house  is  destrt)yed  (g). 

A  covenant  to  insure  does  not  make  the  tenant  an  insurer,  but 
obliges  him  to  find  security  of  a  certain  kind  to  protect  the  land- 
lord against  the  risk  of  tire.  An  insurance  nnder  it  U  of  landlord's 
interest. 

Form  of  covenant  to  insure. — The  covenant  to  insure  is  not  void 
for  uncertainty  where  neither  the  word?^  against  fire  nor  the  name 
of  the  office  is  mentioned  {h).  It  is  usual  either  to  name 
[*  275]  *pirticular  insurers  or  to  insert  the  words  "  some  sufficient 
offioe"  (i.  c,  solvent  insurers),  or  "some  office  to  bo  approved 
by  the  lessor."  But  the  most  satisfactory  method  is  for  the  lessor 
to  insure  and  charge  the  premiums  as  an  additional  rent.  This 
method,  if  with  the  addition  of  a  covenant  by  him  to  spend  the 
proceeds  in  reinstatement,  leaves  nothing  to  be  desired. 

Damages  far  breach  of  covenant  to  repair. — Damages  for  breach  uf  a 
covenant  to  repair  if  a  fire  has  happened  are  measured  by  the  cost 
of  rebuilding  (i). 

Breach  of  covenant  to  insure. — Damages  for  breach  of  a  covenant  to 
insure  would  be  the  amount  of  damage  done  by  the  firo  not  exceed- 
ing the  ppecific  amount,  if  any,  foi*  which  the  insurance  was  to  be 
made  (k). 

Where  the  covenant  is  to  insure  sufficiently,  and  is  broken,  and 
a  firo  happens,  the  measure  of  damage  is  the  value  of  thebuildim/s, 
&c.,  that  being  the  limit  of  a  sufficient  insurance.  Damages  must 
not  be  calculated  so  as  to  give  new  for  old. 

It  is  no  answer  to  an  action  for  breach  that  the  landlord  might 
pay  the  insurer  and  charge  the  premium  as  an  additional  rent, 
since  the  landlord  is  entitled  to  rely  on  the  covenant  nnd  leave  the 
tenant  to  keep  the  buildings  insured  at  his  peril:  but  if  the  tenant 
breaks  his  covenant,  the  landlord  may  pay  the  jmmium,  and  in 


(/)  Allan  V.  Marklaml,  20  Scr.  b   R.  268.     Ihiffy.  f'kminu,  8  ('.  S.  V    (!)r, 
serieB)  7«li. 

((/)  ^^i»n>  V'  Milliijan^  28  Bcuv.  41tt. 

(A)  Doe  V.  Sheinii,  8  Camp.  134. 

(i)  Mftyne  on  DtimaguR  241  (3rd  ed.). 

(*)  Doufflaa  v.  Murphy,  10  U.  C  (Q  U.)  113.     Yattn  y.  Ihnutrr,  11  Kx.  If.. 

228  * 


OBLIGATION   OP  TENANTS   TO    INSURE. 


=K  277 


Buch  a  case,  if  a  loss  occurs,  the  measure  of  damage  for  the  breach 
will  be  merely  the  amount  of  premiums  bo  i)aid  (J). 

Where  no  loss  has  occurred,  the  measure  of  damages  is  what  it 
would  cost  the  landlord  to  put  himself  into  the  position  in 
which  he  would  have  been  but  for  the  ^omission  of  the  de-  ['^  270] 
fendant  (m),  i.  e.,  the  premium  paid  to  keep  up  an  existing 
policy,  or  obtain  a  fvtAx  one,  or  take  out  one  if  none  has  been  ef- 
fected (n). 

Relief  for  breach  of  covenant  to  insure. — The  Courts  of  Equity  used 
to  hold  that  breach  of  a  covenant  to  insure  was  wilful,  and  one  for 
which  compensation  could  not  be  calculated  (o),  and  therefore 
would  not  relieve  from  forfeiture  so  incurred.  Hence  it  became 
needful  to  pass  22  &  23  Vict.  c.  35,  ss.  4,  9.  No  forfeiturt',  of  course, 
was  worlieu  thereby,  unless  so  stipulated ;  and  without  a  forfeiture 
clause  the  remedy  for  the  breacli  was  merely  an  action  for  damages. 

What  breach  works  forfeiture. — The  breach  must  be  substantial  to 
work  a  forfeiture.  Thus  an  insurance  in  the  lessor's  name  is  not  a 
substantial  breach  of  a  covenant  to  insure  in  name  of  lessor  and 
lessee  (p). 

But  to  insure  in  joint  names  when  the  covenant  is  to  insure  in 
the  lessor's  would  be  a  substantial  breach  (7),  eincethe  lessee  cou'd 
in  such  a  case  give  a  good  receipt  for  the  policy-moneys. 

To  leave  the  premises  uninsured  for  ever  so  short  a  time  is  a 
breach  (r). 

Forfeiture  not  cured  by  ante-dating  receipt. — Where  a  breach  has 
been  committed,  the  insurers  cjinnot  cure  the  forfeiture,  if  any,  in- 
curred thereby,  by  dating  back  the  receipt  (s)  for  the  premium. 

Breach  of  covenant  to  insure,  when  not  enforceable.     Estoppel  of  Ics- 
smr. — If  any  conduct  of  the  lessor  induces  the  lessee  to  l)e- 
lieve  he  is  doing  all  that  is  necessary  under  the  ^covenant,  [*  277] 
no  forfeiture  will  result  (0>  since  an  estoppel  is  worked  by 
the  lessor's  acts. 

Waiver  by  lessor. — The  lessor  waives  the  forfeiture  if  ho  accept 
rent  falling  due  after  the  breach ;  but  the  breach  is  a  continuing 
breach,  and  the  waiver  operates  only  as  to  the  ])ortion  of  time  prior 
to  such  waiver  (u).    22  x,  23  Vict.  c.  35,  the  statute  governing  relief 

(/)  Dou(fla3  V.  Murphy,  10  U.  C  (Q.  B)  110. 

(m)  Muyue  Damagos  242  (Mrd  ed).  Charles  v.  Altin,  15  C  IJ.  46-05,  2i{  \..  .1. 
C.  P.  1SJ7,  204. 

(h)  Charlton  v.J>rwei%  2  H.  &  11.  845.  Quiltcr  v.  Mapleson,  9  Q.  IJ.  1).  CT-J, 
62  L.  J.  Q.  B.  44,  47  L.  T.  N.  S.  501,  81  W.  tt.  75. 

(0)  Jio]fe  V.  itarris,  2  Prico  200  iiDte.     Piatt  ('i)veiiuiit.s  102. 

ip)  Havem  v.  Middleton,  10  Ha.  041,  17  Jur  2T\,  1  W.  U  260.  Doe  v.  P,>rk; 
IB.  A:  Ad.  428. 

(7)  Pcnniallx.  Harbnrne,  12  Jur   159,  12  Q.  B.  a08,  17  I..  .1.  Q.  B.  04. 

(»•)  //ry  V.  Wych,  2  (Jiilc  &  1)  501),  12  L.  J.  Q.  B.  h:J,  O.lur  550.  Doe  v.  I'lph, 
lU.ltir.  270,  18  li.  J  Q   B  10ft. 

(n)  Wilson  \.  Wilson,  H  ('.  B  ()l(i,  l«.hir.  58',  2:}  L  .1   ('  P.  ia7. 

it)  Doe  V.  Howe,  \  By.  &  M.  )I43.     Ihe  v.  Sutton,  0  ('.  k  P.  70(». 

(h)  Doe  V.  (lltidwin,  0  Q.  B  058,  Piice  v.  Woncood,  5  Jur.  N.  S.  472,  38  1^. 
T.  140,  7  W.  U.  bOO.    Bridges  v.  Longman,  24  Beav.  27. 

229 


i'fer 


.      ■■■& 
i-    III 


*278 


THE  LAWS  OF  INSURANCE. 


; 


asrainst  breach  of  covenant  to  insure,  has  been  repealed  by  44  &  45 
Vict.  c.  41.- 

Relief  under  C.  A.  1881. — Under  the  present  law  these  cases  are 
only  important  to  show  what  amounts  to  a  forfeiture,  for  the  High 
Court  has  now  power  to  relieve  against  such  forfeiture  when  proved 
on  such  terms  as  seem  just.  And  no  stipulation  or  provision  in  a 
lease  can  in  any  way  exclude  this  jurisdiction  (x).  Tiie  Court  may 
relieve  upon  terms  such  as  an  injunction  against  a  future  breach 
or  restitutio  in  integrum,  or  damages  estimated  in  manner  already 
indicated. 

It  may  be  further  observed  that  a  landlord  cannot  now  bring  his 
action  for  a  breach  of  covenant  to  insure,,  if  he  seeks  a  forfeiture  in 
such  action,  unless  he  has  served  a  notice  on  the  lessee  requiring 
him  to  remedy  the  breach  and  to  pay  a  money  compens.ition  for 
the  breach ;  and  unless  the  lessee  fails  within  a  reasonable  time 
thereafter  to  remedy  the  breach  to  the  landlord's  satisfaction,  if  it 
is  capable  of  being  remedied.  Forfeiture  therefore  for  breach  of 
covenant  to  insure  is  now  virtually  impossible  (y). 

Repeal  of 22  &  28  Vict  c.  35,  ss.  4-9.  Effects— By  the  repeal  by 
the  Conveyancing  Act,  1881,  of  22  &  23  Vict.  c.  3o,  ss.  4-0, 
[*  278]  the  protection  (no  longer  *really  needed)  of  an  assiiinee  of 
a  lease,  to  whom  the  last  receipt  for  rent  has  been  produced, 
is  withdrawn.  On  the  other  hand,  the  landlord  no  longer  lias  tlie 
benefit  of  an  informal  insurance  by  the  tenani,  given  by  s.  7  of  that 
Act. 

Title  to  proceeds.  Covenant  to  insure  in  landlord's  name. — Where 
the  tenant  covenants  to  insure  in  the  landlord's  name,  he  is  not 
entitled  to  receive  the  j)olicy-money8  in  case  of  a  tire,  or  to  employ 
them  in  reinstatement,  or  to  reinstate  and  then  demand  the  policy- 
moneys  (z). 

It  may  even  be  doubted  whether  if  he  allows  the  landlord  to 
receive  the  money  he  can  insist  on  its  being  employed  in  reinstate- 
ment (a).  But  he  is  clearly  entitled  to  serve  a  notice  to  reinstate 
upon  the  insurer,  and  by  that  method  to  obtain  the  benefit  of  the 
policy  (6).  And  the  landlord  has  the  same  right  respecting  any 
msurnnce  effected  by  the  tenant  on  his  own  account  (c). 

Separate  insurance  by  landlord  and  tmant,  effects  of. — Where  Ihe 
lessee  is  under  covenant  to  insure,  and  the  laridlord  insures  also  on 
his  own  account  the  same  interest,  the  landlord  would  seem  to  be 
covered  in  both  cases,  and  the  insurers  would  be  entitled  to  contri- 
bution inter  ae,  where  the  insurance  exceeded  the  whole  value  of 
the  premises,  or  the  fire  was  only  partial.    But  in  such  a  case  the 

(a;)  44  &  45  Vict.  c.  41.  h.  14  (2).  Qidlter  v.  Mapkson  0  Q.  B.  D.  (573.  52  L 
J.  Q  B.  44,  47  L.  T.  N  S.  5«1,  ai  W.  K.  76.    Woodfull,  (524,  (526  (12tli  od.). 

(.V)  44  &  46  Vict  c.  41,  h.  14  (1). 

(2)  Garden  v.  Ingram,  2<  Ij.  J.  Ch.  478,  per  Lord  St.  Leonnrdfl. 

(«)  See,  however,  Itrf/nard  v.  Arnold,  10  Ch.  Ai)p.  38(5,  2:5  W.  II.  804 

(h)  Under  8.  88  of  14  Geo.  III.  c.  78. 

(c)  Reynard  v,  Arnold,  10  Ch.  App.  38C,  uUirming  S.  C.  10  Eq.  218,  28  W.  11. 
804. 

280 


OBLIGATION   OP  TENANTS  TO   INSURE. 


*280 


landlord  will  not  be  allowed  to  increase  the  liability  of  the  tenant 
or  to  diminish  the  benefit  of  his  policy,  and  will  be  obliged  to  bring 
into  account  what  he  has  received  on  his  policy  (c).  Double  insur- 
ance.—^ot  instance,  if  both  insured  for  £500  on  a  house  worth 
£700,  in  case  of  total  loss  £350  would  be  paid  on  each  })olicy,  and 
the  landlord  would  be  obliged  to  account  to  the  tenant  for 
£150,  the  *amount  whereby  the  benefit  of  the  latter'n  policy  [=*•  279] 
effected  under  a  covenent  in  his  lease  would  be  diminished. 
If  damage  were  done,  say  to  £100,  each  would  receive  £50.  But 
thtf  landlord  would  have  to  hand  over  the  £50  which  he  received, 
or  spend  it  in  reinstatement. 

Where  a  tenant  being  under  a  covenant  to  repair,  &c.,  but  not  to 
insure,  does  insure,  such  policy  is  not  an  insurance  of  the  landlord's 
interest,  but  of  the  tenant's  liability,  and  in  such  a  case  no  contri- 
bution would  take  place  between  the  insurers  if  the  landlord  in- 
sured, and  the  tenant  would  not  be  harmed  by  such  an  insur- 
ance (d)- 

Option  to  purchase  by  tenant  bound  to  insure. — When  a  tenant  bound 
to  insure  has  an  option  to  purchase,  he  can  insist  on  the  proceeds 
of  a  policy  effected  by  him  being  taken  in  satisfaction  of  part  of  the 
purchase-money  (e). 

A  covenant  to  pay  rent  continues  in  force  even  after  the  destruc- 
tion of  the  property  in  respect  wiiereof  it  is  payable  (/).  Tenant's 
insurable  interest  in  rent. — The  liability  gives  the  tenant  who  incurs 
it  an  insurable  interest  in  his  rent  which  most  offices  are  willing  to 
cover.  Where  the  covenant  to  pay  rent  is  so  qualified  as  to  ex- 
clude this  liability,  the  rent  will,  in  case  of  a  partial  loss,  be  appor- 
tioned (p).  But  even  a  covenant  excluding  the  liability  to  repair 
in  case  of  casualties  by  fire  will  not  remove  the  liability  for  rent  (h). 
It  is  therefore  prudent,  ir  all  cases  where  liability  to  pay  rent  in 
case  of  fire  is  not  clearly  excluded,  for  the  lessee  to  insure  hig 
rent. 

Where  a  tenant  is  in  no  way  resjjonsible  in  case  of  *fire,  [*  280] 
he  may  still  be  entitled  to  insure,  to  secure  himself  against 
lops  of  the  benefit  of  his  term  by  the  happening  of  a  fire,  or  loss  of 
premises  for  which  he  is  liable  to  pay  rent  for  a  term.  But  the 
value  of  his  tenant's  interest  not  being  commensurate  with  the  value 
of  the  fee-simple,  he  could  not,  on  an  insurance  on  his  own  interest, 

(c)  Reynard  v.  Arnold,  10  Ch.  App.  88G,  affirming  S.  C.  10  Eq.  218,  2:i  W.  R. 
804. 

■     (d)  Darrell  v.  Tibbits,  5  Q.  B.  D  GOO,  50  L.  J.  Q  B.  33,  29  W  11.  0(5,  43  L.  T. 
N.  S.  707. 

(e)  }fn/nu,d  v.  Arnold,  10  Ch.  App.  386,  23  VV.  R.  804. 

( /■)  Jiulzupf'el  V.  Jittk  r,  18  Ves.  115.  Baker  v.  Jlolzapfel,  4  Tuuiit.  45  (1811). 
Lop  V.  Denli,  28  T.J.  Q  B.  171.  Packer  v.  Gibbias,  1  Q  B.  421.  Izon  v.  Cor- 
/OH,  f)  Bliiig.  N.  C.  501  (1839). 

{q)  Taylor  v.  Caldwell,  H  B.  &  S.  820,  32  L.  J.  Q.  B  104,  11  W.  R.  7:%  8  L. 
T.  U.  S  3r,(i. 

(A)  Iie{fourv.  Weston,  IT.  II.  310  (1786),  and  i^m/'-rv  /lin-v/c/y,  (1767),  there- 
b  cited. 

2111 


S   ,<    :H 


iVf 


k  1.1 


*280 


THE  LAWS  OP  INSURANCE. 


recover  the  fee-simple  value  (i)  except  by  way  of  reinstatement.  T(» 
hold  otherwise  would  be  to  enable  him,  by  adequate  insurance  in 
case  of  fire  to  put  himself  into  the  freeholaer's  shoes. 

Covenant  to  insure  loss.  Bankruptcy  of  covenantor. — Where  a  con- 
tract  is  made  to  insure  the  property  of  another,  and  that  is  burnt 
and  the  contractor  becomes  bankrupt,  the  owner  of  the  property 
may  prove  in  the  bankruptcy  for  the  value  of  the  property  lost.  Tt 
does  not  seem  to  matter  whether  the  contract  is  to  effect  an  insur- 
ance or  one  to  be  liable  for  damage  by  fire.  But  the  claim  of  tlio 
owner  must  arise  from  f^p  -  re  suffered  before  the  bankruptcy.  It 
might  at  first  seem?'  i  o'aim  for  unliquidated  damages,  bui 

the  Court  in  the  case  ci  '    r  held  that  the  quantity  and  quality 

of  the  timber  was  settled  before  the  bankruptcy,  and  that  the  value 
was  regulated  by  the  mirket  price,  and  that  a  proof  for  its  value  at 
that  price  was  admissibie  (/c  . 


(i)  Castellain  v  Preston,  11  Q.  B.  D.  380,  per  Bowen,  L.  J.:  reported  also  52 
L.  J.  Q.  B.  3G6,  49  L.  T.  N.  S.  29.  31  W.  R.  567. 
(A;)  Ex  parte  Bateman,  25  L.  J.  Bkcy.  19,  2  Jur.  N.  S.  365. 


l!;:! 


232 


MORTGAGE. 


*282 


*CHAPTER  XV. 


MORTGAGE. 


[*  281] 


'    «.' 


Mortgagor'a  insurable  interest. — The  mortgagor  has  an  insurable 
interest  in  so  much  of  the  property  mortgaged  by  him  as  is  of  an 
insurable  nature.  Whatever  the  number  of  mortgages  he  is  equit- 
able owner  still,  and  his  right  to  insure  remains  co-extensive  with 
the  value  of  the  property  (a;.  In  case  of  loss  the  mortgagor  has  a 
perfect  right  to  look  to  his  indemnity  from  the  insurers  as  a  means 
of  discharging  the  incumbrances  in  the  place  of  the  property  itself. 
The  incumbrances  do  not  cease  with  the  loss,  and  the  whole  loss  is 
the  mortgagor's,  and  he  remains  personally  liable  for  the  mortgage 
debt;  for  "every  mortgage  implies  a  loan,  and  every  loan  implies  a 
debt,  for  which  the  property  of  the  borrower  is  liable,  though  he 
have  neither  entered  into  a  bond  nor  covenant  for  payment  ofit"  (6). 

Mortgagor' 8  interest  ceaaea  on  foreclosure. — The  mortgagor's  insurable 
interest  in  the  mortgaged  properties  does  not  cease  until  foreclosure 
absolute,  and  the  extinction  of  all  equities  in  his  favour  (c) ;  and  in 
Canada  until  the  mortgage  debt  has  been  paid,  though  foreclosure 
has  taken  place,  on  the  ground  that  the  mortgagor  is  still  liable  (ji). 
In  a  recent  American  case  the  mortgagor  was  held  to  have  an  in- 
terest though  the  mortgagee  had  sold,  as  the  sale  was  set  aside. 

Mortgagee's  insurable  interest — A  mortgagee  as  such  has  only  a 
partial  interest  in  any  insurable  property  comprised  in  his 
security.  His  *mortgage  interest  is  limited  to  the  amount  [*  282] 
of  his  mortgage  debt  by  the  terms  of  14  Geo.  III.  c.  48  (e). 
Any  fire  policy  effected,  in  virtue  of  his  mortgage  interest  is  merely 
a  collateral  security  for  his  debt,  for  "  the  contract  of  insurance 
contained  in  a  marme  or  fire  policy  is  a  contract  of  indemnity  and 
indemnity  only,  and  the  insured,  in  case  of  a  loss  against  which 
the  policy  has  been  made,  shall  be  fully  indemnified,  but  shall 
never  be  more  than  fully  indemnified "  (/).  Such  mortgage  in- 
terest has  in  New  Brunswick  been  decided  to  end  on  foreclosure 
absolute,  and  if  a  fire  happen  thereafter  the  mortgagee  cannot  re- 
fa)  Glover  v.  Black,  1  Wra  Bl.  890,  8  Burr.  1394. 

ih)  Fisher  Mortgages,  vol.  2,  p  679. 

(c)  Thompnon  v.  Grant,  4  MaUd.  438.    See  Angell  Ins.  p.  100,  for  American 
luses  hereon.     Stephens  v.  lUitum,  4H  III.  327. 

((/)  Parsons  v.  Queen  Insurance,  20  U.  C.  (C.  P.)  188,  211      This  case  came 
to  the  Privy  Cotmcil  on  another  point,  7  App.  (.'as  90. 

{e]  See  per  Bowen,  L.  J.,  in  VasfeHain  v.  Preston,  11  Q.  B.  D.  380,  02  L.  J. 
Q  B.  300  at  870,  49  L.  T.  N.  8  29,  31  W.  R  567. 

t  /■)  Castellain  v.  l^eaton  11  Q.  B.  D.  880,  per  Brett.  L  J. 

233 


i 


^=283 


THE  LAWS   OF  INSUHANCE. 


cover  on  the  policy  effected  by  him  as  mortgagee  (g)-,  and  he  can- 
not, ill  case  of  a  fire,  recover  more  than  the  amount  due  at  the  time 
of  the  fire  upon  his  security,  because  that  is  tlie  measure  of  hig 
loss,  and  the  contract  is  only  one  of  indemnity.  The  same  is  also 
the  rule  in  Canada  (A).  Such  a  policy  will  not,  according  to  some 
American  authorities,  cover  further  advances,  unless  it  be  specially 
so  stipulated  (i),  so  that,  though  the  mortgage  deed  may  contem- 
plate further  advances,  only  the  unpaid  balance  of  the  amount  due 
at  the  time  when  the  policy  was  effected  can  be  recovered.  This 
would,  however,  seem  to  beat  variance  with  English  law;  for  "a 
person  who  has  a  limited  interest  may  insure  nevertheless  on  the 
total  value  of  the  subject-matter  of  the  insurance,  and  he  may  re- 
cover the  whole  value  subject  to  these  two  provisions.  First  of  all, 
the  form  of  his  policy  must  be  such  as  to  enable  him  to  recover 

the  total  value,  because  the  assured  may  so  limit  himself 
[*  283]  by  the  way  in  which  *he  insures  as  not  really  to  insure  the 

whole  value  of  the  subject  matter;  and  secondly,  he  must 
intend  to  insure  the  whole  value  at  the  time  "  (k).  It  therefore 
seems  that  if  the  policy  is  such  as  to  cover  the  full  value  of  the 

Eroperty  insured,  the  mortgagee  might  recover  to  the  full  extent  of 
is  interest  therein,  whether  such  interest  were  created  by  oiiginal 
advance  or  further  advance.  The  mortgagor  has  no  interest  in  a 
mortgagee's  policy  effected  with  the  mortgagee's  own  moneys,  and 
not  in  pursuance  of  any  agreement  between  them  (f)- 

Mortgagor^9  interest  in  mortgagee's  policy. — But  by  the  operation  of 
8.  83  of  the  old  Metropolitan  Building  Act  (m)  (left  unrepealed  by 
the  Metropolitan  Building  Act,  7  &  8-  Vict.  c.  84),  the  mortga^dr 
may  insist  on  the  proceeds  of  a  mortgagee's  policy  being  applied 
towards  reinstatement,  and  thus  the  policy  might  enure  for  the  ben- 
efit of  the  estate  (n).  Mr.  Davidson  therefore  thinks  (o)  that  in 
such  a  case  the  mortgagee  would  have  a  right  to  recover  the  prem- 
iums independently  of  Lord  Cranworth's  or  the  Conveyancing  Acts, 
probably  as  money  paid  to  the  mortgagor's  use.  This,  however, 
has  not  been  expressly  decided. 

(g)  Oaskin  v.  Phoenix,  6  Allen  (New  Bruns  )  429.  See  also  Smith  v.  Colum- 
bian, 17  Peiin.  2r)3.  Seeing  that  he  haa  only  insured  a  special  interest.  an<l  not 
the  premises.  But,  contn),  sec  Bailey  v  American  Ins.  Co.,  5  McCrary  (U  S. 
Cirt  Ct.)22l. 

(h)  Ogden  v.  Montreal,  H  U.  C.  (C  P.)  4!»7,  and  ^en  Ehmorth  v.  Alliance  Co., 
43  L.  J.  C  P.  394  n..  a  case  of  infurancc  of  a  iiartial  interest  or  lien.  And  also 
Johnson  v.  North  Hn'tish  and  Merrantile,  1  Holmes  (U.  S.  Giro.  Ct.)  11". 
Ilumphret/  v.  Hartford  Fire,  15  Blutch  (U.  S.  Circ.  Ct.  504. 

(?)  Smith  V.  Columbia,  17  Penn.  253. 

(A;)  Castellain  v.  J\e.stun,  11  Q.  B.  D  at  398.  per  Bowen.  L.  J.  Sec  note  (e) 
supra. 

I)  Dohson  V.  Land.  8  Hare  210,  14  Jur.  221,  19  L  J.  Ch.  484.  King  v.  State 
Mutual,  61  Mass.  (7  Cush  )  1. 

(m)  13  Geo.  HI.  c.  78. 

(n)  Ex  parte  Gorelei/,  4  Do  O.  J.  &  S.  477,  13  W.  R.  60,  "4  L.  J.  Bkcy.  1,  11 
L.  T.  N.  S   319,  10  Jur.  NS.  1085. 

(o)  Precedents,  vol.  2,  pt.  2,  p.  69  note  (4th  ed.). 

234  '  , 


HORTGAQE. 


2S5 


Mortgagee's  right  to  charge  premiums. — In  the  absence  of  express 
stipulation,  a  mortgagee  could  not,  independently  of  statute  (p), 
char'^e  in  account  the  premiums  paid  by  him  upon  an  insurance  of 
the  property  against  fire  (g),  nor  could  he  (even  though  the  mort- 
gagor hud  covenanted  to  insure  against  fire  and  neglected  to  do  bo), 
as  against  a  subsequent  incumbrancer,  himself  insure  the  mortgaged 
premises  and  add  the  sums  so  paid  to  his  mortgage  debt  (rj. 
♦Chattels  do  not  come  within  the  ecope  of  14  Geo.  III.  c.  [*  284] 
78  8.  83,  and  reinstatement  of  them  cannot  be  had.  Not 
obliged  to  reinstate  fixtures. — Consequently  the  mortgagee  cannot  bo 
made  to  expend,  m  reinstating  fixtures  which  were  not  attached  to 
the  freehold,  money  arising  from  an  insurance  thereon  effected  on 
his  own  account  («). 

Mortgagee's  right  in  mortgagor's  policy. — If  the  mortgagor  after  the 
mortgage,  and  in  the  absence  of  any  agreement  by  him  to  insure, 
does  insure,  the  mortgagee  could  not,  until  the  passing  of  the  Con- 
veyancing Act,  1881,  claim  to  be  paid  out  of  the  proceeds  of  sucli 
insurance  (0-  He  could  however,  if  the  insurance-money  had  not 
been  paid  over,  insist  on  its  being  applied  in  reinstatement  (it). 
Now,  however,  by  the  Conveyancing  and  Law  of  Propeity  Act, 
1881  (v),  a  mortgagee,  where  the  mortgage  is  made  by  deed,  will 
have  the  power,  to  the  like  extent  as  if  it  had  been  expressed  in 
terms  by  the  mortgage  deed  "at  any  time  after  the  date  of  the  mort- 
gage deed,  to  insure  and  keep  insured  against  loss  or  damage  by 
fire  any  building,  or  any  effects  or  property  of  an  insurable  nature, 
whether  affixed  to  the  fieehold  or  not,  being  or  forming  part  of  the 
mortgaged  property ;  and  the  premiums  paid  for  any  such  insur- 
ance shall  be  a  charge  on  the  mortgaged  property  in  addition  to 
the  mortgage-money,  and  with  the  same  privity,  and  with  interest 
at  the  same  rate  as  the  mortgage-money  '*  {%). 

Conveyancing  Act,  s.  23. — And  by  s.  23  of  the  same  Act  it  is  pro- 
vided that — "  (1)  The  amount  of  an  insurance  effected  by  a  mort- 
gagee against  loss  or  damage  by  fire  under  the  power  in  that  be- 
half conferred  by  this  Act  shall  not  exceed  the  amount  specified  in 
the  mortgage  deed,  or,  if  no  amount  is  therein  sppcified, 
then  shall  not  exceed  *two-third  parts  of  the  amount  that  [*  285] 
would  be  required  in  case  of  total  destruction  to  restore  the 
property  insured. 

"(2)  An  assurance  shall  not,  under  the  power  conferred  by  this 
Act,  be  effected  by  a  mortgage  in  any  of  the  following  ca^cs 
(namely) : — 

(p)  44  &  45  Vict.  c.  4.  b.  19  (2). 
[q)  Bellamy  v  Brickenden,  supra,  2  J.  &  H.  137. 

r)  Brook  v.  Stone,  84  L.  J.  Ch.  251,  12  L.  T.  N.  S.  114,  M  W.  R  401  (1805) 
(s)  Ex  parte  Goreley,  ubi  supra. 

(t)  11  Dav.  C6.  Lees  v.  Whiteky,  2  Eq.  148,  35  L.  J.  Ch.  413,  14  L.  T.  N.  S. 
472,  14  W.  R  534.    See  Angell  114,  s.  60. 

iu)  Ex  parte  Goreley,  ubi  supra. 
»)  44  A  45  Vict.  t.  41. 
x)  S.  19,  clause  3.  . 

aw 


:     I 


*286 


THE  LAWS  OP  INSURANCE. 


m. 


■'A.'ta 


"  Where  there  is  a  declaration  in  the  mortgage  deed  that  no  in- 
surance is  required. 

"  Where  an  insurance  is  kept  up  by  or  on  behalf  of  the  mortgagor 
in  accordance  with  the  mortgage  deed. 

"When  the  mortgage  deed  contains  no  stipulation  respecting  in- 
surance, and  an  insurance  is  kept  up  by  or  on  behalf  of  the  mort- 
gagor, to  the  amount  in  which  the  mortgagee  is  by  this  Act  author- 
ized to  insure. 

"(3)  All  money  received  on  an  insurance  effected  under  the 
mortgage  deed  or  under  this  Act,  shall,  if  the  mortgagee  so  requirt-g, 
be  applied  by  the  mortgagor  in  making  good  the  loss  or  damage  in 
respect  of  which  the  money  is  received. 

"  (4)  Without  prejudice  to  any  obligation  to  the  contrary  imposed 
by  law,  or  by  special  contract,  a  mortgagee  may  require  tluit  all 
money  received  on  an  insurance  be  applied  in  or  towards  discharge 
of  the  money  due  under  this  mort}.'age." 

Remarks  on  conveyancing  Act,  1881. — The  Act  imposes  no  obliga- 
tion to  insure  upon  the  mortgagor.  It  simply  gives  in  certain  cases 
to  the  mortgagee  the  power  to  <  tfect  and  keep  up  a  policy  and  pay 
the  premiums,  which  will  become  a  charge  on  the  mortgaged  prop- 
erty in  addition  to  the  mortgage-money,  and  the  mortgagee  can 
only  charge  the  mortgagor  the  premium  on  an  insurance  not  ex- 
ceeding the  amount  agreed  in  the  mortgage  deed,  or,  if  none  be 
there  agreed,  two-thirds  of  the  cost  of  reinstating,  s.  23  (1),  and  he 
cannot  charge  the  mortgagor  with  premiums  in  the  face  of  contrary 

stipulations. 
[*  286]  ^Act  applies  to  mortgage  by  deed. — The  Act  applies  only  to 
a  mortgage  by  deed.  Where  an  equitable  mortgage  exists 
with  an  agreement  to  execute  a  legal  mortgage,  the  mortgagee  can 
compel  the  execution  of  the  latter;  but  it  would  seem,  from  the 
terms  of  the  Act,  could  not  exercise  his  statutory  rights  until  the 
execution  of  such  deed. 

Two-thirds  value  insurable. — The  limit  of  insurance  for  which  the 
premium  can  be  charged  to  the  mortgagor,  twD-thirds  of  the  cost 
of  reinstatement,  seems  based  on  the  usual  limit  of  a  mortgagee's 
advance. 

Reinstntement  under  conveyancing  Act,  1881. — The  Act  provides  for 
a  defect  in  k.  83  of  14  Geo.  III.  c.  78,  by  giving  the  mortgagee  a 
power  to  insist  on  the  proceeds  of  any  insurance  effected  under  the 
mortgage  deed  or  the  Act  being  employed  in  (reinstating  the  prem- 
ises, s.  23  (3),  whether  the  same  have  or  have  not  been  paid  over  to 
the  insurer.  S.  83  only  compels  insurers  to  reinstate  on  the  request 
of  parties  interested  in  the  property  insured,  but  does  not  oblige 
either  of  such  parties,  to  whom  the  insurer  may  have  paid  over  the 
insurance-money,  to  reinstate  on  the  request  of  the  other  parties, 
interested.  These  statutory  provisions  do  not  affect  the  mortga- 
gee's right  to  insure  the  whole  amount  of  his  mortgage  debt  in  a 
case  where  he  is  insufficiently  secured  by  poHci'  s  to  the  amounts 
aforesaid.     Conveyancing  Act  limits  m^tagee'sright  to  charge  premiums, 

236 


MORTOAOE. 


*288 


'»«.: 


not  his  right  to  insure. — But  he  would  be  unable  to  charge  the  pre- 
miums oil  an  amount  in  excess  of  what  is  specified  in  the  statute, 
and  would  be  liable  to  have  the  proceeds  of  his  policy  applied  in 
reinstaling  the  premises  if  the  mortgagor  so  l'3sired  it  (y). 

Settled  Land  Ad,  1882. — Where  improvemeiits  are  effected  under 
the  Settled  Land  Act,  1882  (z),  and  the  tenant  for  life,  or  any  suc- 
cessor having  a  limited  interest,  is  obliged  to  insure  ihe  same  under 
g  28  (l)i  it  would  seem  that,  in  case  such  improvements  were  dam- 
aged by  fire,  such  tenant  for  life,  or  successor,  could  not 
pay  the  proceeds  of  an  insurance  *on  such  improvements  [*  287j 
to  a  mortgage  thereof  without  becoming  liable  to  the  re- 
mainderman, 8.  28  (5). 

Mortgage  of  lessee  insuring  not  entitled  to  policy -money. — And  where 
a  lessee  insured  in  pursuance  of  his  covenant  in  his  lease,  it  would 
Beem  that  the  mortgagee  of  the  leasehold  interest  could  not  claim 
the  proceeds  of  the  policy  (a)  as  against  the  lessor. 

Besides  those  cases  in  which  either  the  insurance  has  been  ef- 
fected without  any  stipulation  between  the  parties  or  to  supplement 
a  defiiult  by  the  mortgagor,  questions  arise  as  to  the  proceeds  of 
policies  effected  under  contract. 

Right  to  'proceeds  of  policy.  Where  covenant  to  repair  broken.  Cov- 
enant to  insure. — Where  lessor  or  lessee  covenants  to  repair,  the  otiier 
of  them  would  have  no  claim  on  a  fire  pulicy  taken  out  for  the 

Surpose  of  protection  against  liability  to  repair  in  case  of  fire  (6), 
ut  it  would  be  different  in  case  of  a  covenant  to  insure;  and  in 
Garden  v.  Ingram  (c)  a  lessee  under  covenant  to  insure  and  apply 
the  proceeds  of  the  policy  in  reinstatement  mortgaged  his  term,  the 
mortgage  deed  containing  no  covenant  as  to  insurance.  A  policy 
was  on  foot  in  accordance  with  the  lease  when  a  fire  happened. 
The  mortgagee  assigned  his  interest  with  benefit  of  policy.  The 
Lord  Chancellor  decided  that  the  mortgagor  could  not  claim  a  lien 
upon  the  policy  for  money  expended  by  him  voluntarily  in  rein- 
sUitement,  as  both  insurance  office  and  lessor  could  insist  upon  the 
policy-moneys  being  wholly  expended  on  reinstatement.  He  de- 
cided further,  that  since  the  object  of  the  insurance  wa§  reinstate- 
ment, the  mortgagor  could  not  claim  the  policy-moneys  as  against 
the  mortgagee  so  as  to  defeat  that  object ;  and  that  being  the  orig- 
inal destination  of  the  money,  and  the  lessee  being  powerless  to  pre- 
vent reinstatement,  it  was  immaterial  to  decide  whether  the  benefit 
of  the  policy  passed  to  the  mortgagee's  vendee. 

*Tlie  mortgagee  had  excercised  his  power  of  sale  with  p  288] 
benefit  of  policy,  so  that  the  lessee's  interest  in  the  prem- 
ises had  ceased.    This  was  held  not  to  aff^'ct  the  validity  of  tho  pol- 


1  m 


'  1 


h-  s 


pi-H^--'  m 


(y)  Ri'vnard  v.  Arnold,  10  Ch.  App.  386,  23  W.  R.  804. 
(«)  45  &  4fi  Vict.  c.  5J8. 

44  &  45  Vict.  c.  41,  s.  23  (4),  but  hoc  (iarden  v.  Ingram,  23  L.  J.  Ch.  274. 


{b)  Ihown  V.  Qtiilter,  2  Eden  210,  Amb.  619. 
5  I..  J.  0  S.  Ch.  105. 
(.)  2  t  L.  J.  Ch;  478. 


Leeds  v.  Cheetham,  1  Sim.  140, 


231 


*289 


THE  LAWS  OF  INSURANCE. 


1 


':■ 


icy,  inasmuch  as  the  lessor's  interest  in  the  premises  continued,  but 
to  deprive  the  lessee  of  all  benefit  of  the  indemnity  promised  by 
the  policy,  since  he  had  not  the  property  in  respect  of  which  it  was 
to  be  given.  In  a  very  recent  American  case,  where  a  mortgage 
contained  a  covenant  by  the  mortgagor  to  insure,  and  the  purcliager 
of  the  redemption  obtained  by  his  agent  a  policy  payable  in  case  of 
loss  to  the  mortgagee,  the  latter  was  held  entitled  to  the  proceeda 
under  the  circumstances  of  the  case  (d). 

This  case  enables  the  mortgagee,  not  to  appropriate  the  proceeds 
of  the  lessee's  policy,  but  to  insist  on  its  being  used  according  to  tlie 
covenant.  In  the  particular  case  the  mortgagor's  vendee  had  be- 
come by  conveyance  the  actual  lessee.  Now,  however,  the  whoL 
diflficultv  has  been  set  at  rest  by  s.  23  (4)  of  the  Conveyancing  Act 
1881  (e)\ 

No  right  of  reinstatement  under  bill  of  sale. — This  section  also  covers 
Lees  V.  Whiteley,  2  Eq.  149,  in  which  case  a  bill-of-sale  holder,  who 
liad  stipulated  for  insurance  but  not  for  appropriation  of  the  pol- 
icy-moneys to  the  debt,  was  held  to  have  no  equity  to  receive  the 
proceeds  of  the  policy  as  against  the  assignees  of  the  grantor,  who 
had  become  bankrupt.  Kindersley,  V.  C,  declined  to  import  any 
term  into  the  contract,  or  to  imply  it  from  the  nature  of  the  stipu- 
lation therein  cont  dned.  A  bill  of  sale  on  chattels  does  not,  as 
would  a  mortgage  on  realty,  give  the  holder  any  right  to  insist  on 
reinstatement  (/). 

Mortijagee  obliged  to  transfer  instead  of  re-convey. — As  a  mortgagee 

may  now  be  compelled  to  transfer  his  mortgage  in  lieu  of 

[*  289]  reconveyance  (gr),  a  question  *may  arise  as  to  an  insurance 

effected  in  his  name,  in  pursuance  of  the  statutory  powers 

given  by  ss.  19,  23,  of  the  Convenancing  Act,  1881. 

Since  the  premiums  in  respect  of  such  insurance  are  to  be  a 
charge  on  the  mortgaged  property  in  addition  to  the  mortgage- 
money,  with  the  same  priority  and  at  the  same  interest  (h),  it  would 
seem  that  the  mortgagor  could  compel  the  mortgagee  to  do  all 
things  necessary  to  obtain  the  assent  of  the  insurers  to  a  transfer 
of  the  policy  with  the  mortgage,  and  the  result  would  seem  to  bo 
the  same  if  the  mortgagee  transferred  of  his  own  accord  instead  of 
at  the  request  of  the  mortgagor,  since  the  effect  of  the  premiums 
being  so  charged  on  the  property  is  virtually  to  make  the  policy  a 
part  of  the  security. 

The  position  of  the  insurers  is  not  altered  by  the  Act.    They 
could  not,  before  or  after  it,  be  compelled  to  assent  to  a  transfer. 
^  Joint  insurance  by  w  ortgagor  and  mortgagee. — Where  mortgagor  and 
mortgagee  effect  a  joint  insurance  on  the  mortgaged  estate,  neither 


(d)  Ihid  V.  M'Crum,  91  N.  Y  412. 

(e)  See  Murriane  Royal  Exdiaixge  Assurance,  1 8  L. 
(/)  Ex  parte  Gurelej/,_4  De  G.  J.  &  S.  477,  84  L.  J. 


13  W.  R.  GO,  10  Jur.  N.  S.  1083. 
(fl)  Conveyancing  Act,  1881  (44  &  45  Vict,  c  41),  b.  15. 
(A)  S.  19. 

238 


J.  Ch.  21(i. 
Bkcy.  11  L. 


T.  N.  S  319, 


MORTGAGE. 


*290 


can  sipt^*y  the  proceeds  of  the  insurance,  which  is  a  joint  security, 
irrespectively  of  the  claims  of  the  other.  So  the  assignees  in  bpnk- 
ruptcy  of  a  mortgagor  who  had  received  ti»e  proceeds  of  a  joint 
policy  were  ordered,  at  the  suit  of  the  mortgagee,  to  pay  them  into 
the  Court  of  Chancery,  although  they  had  already  I  .;;  pnid  into 
the  mortgngor's  account  in  btmkrupcy  (t). 

Receipt  of  one  sufficient. — Nevertheless,  in  the  case  of  a  joint  in- 
surance the  receipt  of  the  one  who  had  the  policy  would  be  a 
sufficient  discharge  to  the  insurance  company  (Ic);  and  Lord  Den 
man  said  (0:  "The  covenant  to  insuro  in  the  names  of  three  per- 
sons is  not  complied  with  by  insuring  in  the  names  of  those  three 
and  another;  tnat  other  party  may  receive  the  money  from 
the  insurance  company  in  case  *of  fire,  or  he  may -release  [*  290] 
an  action  brought  to  recover  the  amount." 

Pov"'r  to  charge  premiums  against  the  mortgagor. — Premiums  paid 
by  *'  lortgagee  to  insure  the  mortgaged  pro|)erty  against  fire  will 
not  Uowed  to  the  mortgagee  in  his  account,  and  cannot  be 

chargbvx  on  the  mortgaged  property  except  by  express  contract  in 
that  behalf,  or  in  virtue  of  statutory  powers  (w).  This  is  so  even 
where  the  mortgagor  has  covenanted  to  insure  and  the  mortgagee 
has  paid  the  premium  on  his  default.  In  such  a  case  the  mort- 
gagee cannot  add  the  premiums  so  paid  to  his  mortgage  debt  as 
against  a  subsequent  incumbrancer  (n). 

Principle  of  aecision. — The  principle  upon  which  the  decisions 
cited  go  is  that  if  the  mortgagee  insures  for  his  own  benefit,  and  is 
not  liable  to  account  for  the  proceeds  of  his  policy  in  case  of  a  loss, 
he  cannot  debit  the  mortgagor  with  the  premiunis.  When  mortga- 
gee may  charge  premiums. — Consequently,  where  the  insurance  is 
authorized  by  the  mortgagor,  or  in  the  mortgage  deed,  and  is  for 
the  mortgagor's  benefit,  the  mortgagee  will  be  entitled  to  his  pre- 
miums, in  account  or  otherwise,  even  where  the  policy  effected  by 
him  does  not  actually  conform  to  the  terms  of  the  deed  (o). 

These  rules  of  law  apply  only  to  such  mortgages,  if  any,  as  were 
effected  before  the  28th  August  1860,  when  Lord  Cran worth's  Act 
came  into  operation  (p). 

All  mortgage  deeds  executed  between  that  date  and  December 
31,  1882,  both  inclusive,  come  within  the  provi?ti<m  of  that  Act. 
This  Act  is  now  repealed  by  Conveyancing  Act,  1881,  s.  71  (1),  but 

(t)  Rogers  v.  Grazebrooke,  12  Sim.  557. 
(ft)  2RoI.  Abr.  410(D  ),  pt.  1,  6. 

(/)  Penniall  v.  JIarbornc,  12  Jur.  IGl,  17  I..  J.  Q.  B,  94,  11  Q.  B.  868. 
(»i)  Dohson  V.  LamJ,  8  Ha.  216, 19  L  .F  Cu.  484,  14  Jar.  pt.  2,  221,     Bellamy 
V.  Jirickenden,  3  J.  &  H   187,  82  Beav.  434.    44  &  45  Vict.  c.  41,  s.  10  (ii  ). 

(k)  Brooke  v.  Stone,  34  L.  J.  Ch.  2r)0,  12  L  T.  N  S.  114,  13  W.  U.  401.  But 
see  ScUolefield  v.  Lockwood  33  L.  J.  Ch.  106.  9  Jur.  N.  S.  738,  1258,  1 1  W.  R. 
555,  where  Lord  Roniilly  allowed  them,  as  mortgagor  was  under  covenant  to  in  • 
»ure,  8  L.  T.  N.  S.  409. 

(o)  Dobson  V.  Land,  -t  De  G.  &  S.  575,  stipra. 

(p)  23  &  24  Vict.  c.  145,  ss.  11.  82,  84.    . 

239 


*292 


THE  LAWS  OP   INSURANCE. 


by  8.  71  (2)  its  benefits  are  saved  for  instrutxK'nts  executed 
[*  291]  before  the  *commencement  of  the  Conveyiiiicini;  Act,  1881 
the  provisions  whereof  as  to  mortgages  only  apply  to  deeds 
executed  after  December  31, 1882  {q). 

Effect  of  Oranworth's  Act,  and  Conveyancing  Act,  1881 — By  Lord 
Cranworih's  Act  (s.  11)  the  mortgaireo  it«,u8  an  incident  of  his  mort- 
gage,  given  the  power  to  insure  and  keep  insured  again-t  fire  the 
whole  or  any  part  of  the  property  mortgaged,  whether  affixed  to  the 
freehold  or  not,  which  is  in  its  nature  insurable,  and  to  add  the 
])retniums  paid  for  any  such  insurance  to  the  principal  money  se- 
cured, at  the  same  rate  of  interest.  But  such  power  will  only  take 
effect  or  be  exercisable  in  the  absence  of  an  express  declaration  to 
the  contrary  in  the  mortgage  deed,  and  may  be  made  to  tako  effect 
subject  to  any  variations  and  limitations  contained  therein  (s.  32). 

The  provision  of  the  Act  seem  to  apply  only  to  deeds  executed 
after  its  passing  (s.  43)  (r). 

The  provisions  of  the  Conveyancing  Act,  1881,  as  to  insurances 
upon  mortgaged  property  are  similar  to  those  of  Lord  Crjnwortli'8 
Act,  but  more  comprehensive,  especially  in  its  provisions  as  to  the 
application  of  the  insurance  money  (?). 

Subrogation  of  insurer  to  mortgagee' a  right*  against  insured. — Though 
where  a  mortgagee  insures  his  debt  on  Jiis  own  account,  the  mort- 
gagor has  no  claim  on  the  proceeds  of  such  a  policy,  the  insurer,  it 
would  eeem,  is  entitled  to  be  pu^.  into  the  mortgagee's  place  ns  to 
the  mortgage  debt  if  he  pays  the  loss ;  and  conversely,  if  the  mort- 
gagee is  paid  by  the  mortgagor  after  loss,  but  before  his  siclion 
against  the  insurer  is  concluded,  he  cannot  recover  on  the  policy. 
And  if  after  payment  on  the  policy  he  recovers,  whether  by  suit  or 
otiherwiSH,  the  mortgage-money,  ho  must  r^-fund  to  thn  in- 
[*  292]  surer  so  *much  of  his  total  receir)ts  from  both  morti,'aK»tr 
and  insurer  as  is  in  excess  of  his  actu  il  loss  by  the  fire. 
This  all  follows  from  the  principle  that  insurance  is  a  contract  of 
full  indemnity  and  no  more  (t). 

Separate  polkics  by  mortgagor  and  mortgagee. — Th§  existence  of  nn 
insurance  by  the  mortgagee  on  his  own  account  would  in  no  way 
affect  the  validity  of  an  insurance  by  the  mortgagor  on  this  interest. 
In  case  of  a  loss,  the  policies  being  on  different  interests,  the  in- 


(q)  Williams,  Real  Property  (18th  ed.),  454  note. 

(>•)  See,  however,  r.  24.  Wiliiamfl,  Real  Proporty,  464,  conHiders  the  Actio 
apply  only  to  deeds  executed  after  its  commencemoiit,  and  ho  does  Bunyan,  Fin; 
Ins.  (Ist  ed.)  195,  in  spite  of  this  section. 

(s)  S.  10  (2). 

(0  Per  Gibson,  J.,  Smith  v.  Columbia,  17  Pent;,  at  201,  and  sec  C\t»teHa!n  v 
Predion,  81  W.  R.  fi67.  11  Q,  B.  I).  880.  52  h  .1.  Q  B.  8(m,  4!)  L.  T.  N.  S.  l»!l 
King  v.  Utate  Mutual,  01  Mass  (7  Cush.)  1.  holds  the  insn'-er'N  right  to  bo  only 
equiiable,  if  any,  and  only  to  arise  when  inortgago  recovers  But  this  decision 
goes  on  narrower  grounds  than  the  others  cited.  A  claim  for  assignment  of  se- 
curities was  made  in  Scotisb  Amicable  Assurance  r.  Nnrthcrn,  21  8u  L  R.  189, 
11  G.  S.  C  (4th  ser'tis)  287. 

240 


MORTGAGE. 


293 


gareTB  would  not  be  entitled  to  contribution  inter  se  (w),  and  the 
mortgager's  insurer  would  have  to  pay  in  full  to  his  assured.  But 
if  the  mortgagor's  insurer  reinstated,  the  mortgagee's  claim  on  his 
policy  would  be  gone. 

Wnen  mortgage  debt  to  be  paid  out  of  mortgagor's  policy.  Subroga- 
tim  of  mortgagee's  insurer  as  against  mortgagor's  insurance. — It  may 
be  that  as  under  s.  23  (4)  of  the  Conveyancing  Act,  1881,  the  mort- 
gagee is  entitled  to  make  the  mortgagor,  out  of  the  proceeds  of  any 
insurance  effected  h}r  him  for  which  no  other  destination  is  pro- 
vided by  law  or  special  contract,''pay  off  the  mortgage  debt,  so  also 
the  mortgagee's  insurer  would,  under  Castellaln  v.  Preston,  be  en- 
abled to  press  his  claim  to  the  mortgagor's  policy,  even  if  not  ef 
fected  in  pursuance  of  a  covenant  to  do  so. 

Mortgagor  not  entitled  to  mortgagee's  insurance. — Where  a  mortgagee 
insures  his  own  mor'_  ^e  interest  in  the  property  comprised  in  his 
secu--^.,  tending  only  to  cover  himself,  the  mortgagor  is  not  en- 
titled lu  benefit  by  such  a  policy. 

Mortgagee's  insurer  subrogated  to  rights  under  mortgage  deed. — The 
mortgagee's  insurer  would,  if  the  property  were  destroyed,  be  bound 
to  pay  the  money  to  the  mortgagee,  and  would  probably,  by  anal- 
ago  to  the  principle  of  underwriters  being  entitled  to  the 
vendee's  lien,  as  *suggestive  by  Bowen,  L.  J.,  in  Castellain  [*  293] 
V.  Preston  (x),  be  entitled  to  the  benefit  of  the  mortgagee's 
security;  or,  if  the  view  of  that  learned  judged  go  too  far,  would 
certainly  be  entitled,  if  the  mortgagee  subsequently  enforced  his 
mortgage  security,  to  repayment  of  the  surplus  realized  thereby  in 
excess  of  the  mortgage  debt. 

Effect  of  insurance  by  mortgagor  and  mortgagee  in  separate  offices. — 
Where  the  mortgagor  has  insured  in  pursuance  of  his  covenant  to 
insure,  and  the  mortgagee  has  also  insured  the  same  estate  in  a 
different  office,  the  two  offices  would  apportion  the  amount  of  the 
insurance,  and  thus  the  mortgagor  would  sustain  a  loss  equal  to  the 
difference  between  the  amount  for  which  he  insured  and  the  ap- 

Sortioned  sum  received  by  him.  By  the  principle,  however,  laid 
own  in  Reynard  v.  Arnold  (y),  the  mortgagor  would  be  entitled  to 
recover  from  the  mortgagee  such  difference.  Conversely,  if  the 
mortgagor,  by  effecting  insuranca  in  addition  to  the  amount  cov- 
enantea  for  in  the  mortgage  deed,  and  by  the  effect  of  contribution 
between  the  two  insurers  the  amount  receivable  on  the  mortgagee's 
policy  is  made  less  than  the  actual  damage  done,  the  mortgagor 
must  account  to  the  mortgagee  pro  tanto  as  to  the  benefit  gained l>y 
him  on  the  other  policy  (z). 

(w)  North  British,  die,  Co.  v.  London,  Liverpool,  and  Olohe,  6  Gh.  D.  09,  86 
L.  T.  N.  S.  6'>9,  46  L.  J.  Ch.  587. 

(x)  11  Q.  B.  D.  at  405,  52  L.  J.  Q.  B.  866,  49  L.  T.  N.  8.  29,  81  W.  R.  687  j 
Me  also  per  Tliesiffer,  L.  J.,  in  Darrdl  v.  Tibbita,  6  Q.  B.  D.  668,  60  L.  J.  Q. 
B.  88,  42  L.  T.  N.  8.  797,  2ft  W.  R.  66. 

(y)  10  Ch.  Ann  386,  2  J  W.  R   804 

(i)  Amea  v.  Rtchardaon,  29  Minnesota  2t>. 

16  PORTER  ON  IN8URANCB.  241 


j'-l' 

i,  [ 


■m 
Ml 


y 


:n7pi 


m 

I 


;(5i 


^iili 


*295 


THE   LAWS  OF  INSURANCE. 


Receiver  apjmnted  by  mortgagee  may  effect  insurance. — The  mortgagee 
has,  as  an  incident  of  his  power  to  appoint  a  receiver  of  the  rents 
and  profits  of  mortgaged  property,  a  right  to  direct  such  receiver 
to  effect  insurance  on  the  said  property,  and  the  premiums  on  such 
insurances  are  payable  out  of  the  income  of  the  mortgaged  prop- 
erty after  the  rents,  taxes,  and  outgoing'^,  and  the  interest  on  mort- 
gages prior  to  that  under  which  he  is  receiver  (a). 

When  mortgagee  bound'  to  account  to  mortgagor  for  policy- 
[*  294]  money. — A  mortgagee  who  receives  the  proceeds  of  an  *in- 

surance  effected  bjr  himself  not  under  the  provisions  of  the 
Act  or  the  mortgage  deed  is  not  liable  to  account  to  the  mortgagor 
for  such  proceeds;  nor  can  the  mortgagor  plead  receipt  of  such 
proceeds  as  eatififaction  of  the  mortgage  debt  to  an  action  upon  the 
mortgagor's  covenant  in  the  deed,  ior  the  latter  is  in  the  position 
of  a  tenant  under  a  repairing  covenant,  whose  house  is  destroyed, 
and  who  has  not  insured,  though  the  landlord  has  done  so  (ft). 

Mortgagee  may  recover  on  his  policy  and  also  from  mortgagor,  but 
only  to  the  amount  of  the  mortgage  debt. — But  though  the  mortgagee 
by  recovery  from  the  insurer  on  his  own  policy  is  not  disentitled 
to  an  action  against  the  mortgagor,  any  sum  recovered  by  him  from 
the  latter,  which,  together  with  the  sum  received  from  the  insurer, 
exceeds  the  whole  amount  of  the  mortgage  debt,  will  belong  to  the 
insurer,  and  the  mortgagee  would  be  trustee  for  the  insurer  of  such 
surplus  (c).  Doctrine  of  subrogation  generally. — "The  doctrine  is 
well  established,  that  where  something  is  insured  against  loss,  either 
in  a  marine  or  in  a  fire  policy,  after  the  assured  has  been  paid  by 
the  insurers  for  the  loss,  the  insurers  are  put  into  the  place  of  the 
assured  with  regard  to  every  right  given  him  by  the  law  respecting 
the  subject-matter  insured,  and  with  regard  to  every  contract  which 
touches  the  subject-matter  insured,  and  which  contract  is  affected 
by  the  loss  or  the  safety  of  the  subject-matter  insured  by  reason  of 
the  peril  insured  against"  (d).  The  effect  of  this  principle  is  that 
the  msurers  on  payment  would  step  into  the  shoes  of  the  mortga- 
gee and  have  all  his  rights  against  the  residue  of  the  mortgaged 
property  and  the  mortgagor. 

It  seems,  by  parity  of  reasoning,  that  subrogation  would  arise 
where  an  action  for  negligence  lay  for  negligent  destruction  or 

damage  of  the  mortgaged  premises  {e). 
[*  296]     ""In  practice  there  isTittle  doubt  that  the  mortgagee  would 

give  the  mortgagor  the  benefit  of  the  policy  on  his  consent- 
ing to  include  the  premiums  as  part  of  the  mortgage  debt,  but  this 
consent  would  not  oind  the  insurers. 
No  case  has  yet  occurred  in  this  country  of  an  insurer  proceed- 

(a)  1881,  8.  24. 

(ft)  Darrelt  v.  Tibhita,  6  Q.  B.  I).  502,  50  L.  J.  Q.  B.  83,  42  L.  T.  N.  S.  71)7, 
29  W.  R.  00. 

((•)  Per  Jessel,  M.  R.,  Commercial  Union  v.  Lister,  48  L.  J.  Ch.  002,  0  Ch. 
App  483. 

(rf)  Per  Brett,  L.  J.,  in  Darrell  v.  TibUia,  5  Q.  B.  D.  at  508. 

(c)  Commercial  Union  v.  Lister,  0  Ch.  App.  488,  48  L.  J.  Ch.  601. 

242 


MORTGAGEE. 


296 


ing  against  a  mortgagor  under  the  above  circumstancos  in  exercise 
of  his  subrogated  rights.  And  it  is  unlikely  that  the  insurers  would 
make  any  claim  against  the  mortgagor,  since  such  claim  would  not 
conduce  to  their  prosperity  in  business,  though  they  might  on  the 
principle  of  Castdlain  v.  Preston  (/),  make  the  mortgagee  hand 
over  any  amount  received  by  liim  in  excess  of  hia  mortgage  debt,  or 
prevent  his  recovering  such  amount  by  assigning  to  the  mortgagor 
their  rights  of  subrogation  to  the  mortgagee's  claims  under  the 
mortgage  deed.  It  would  seem  that,  if  such  an  assignment  were 
given,  it  might  be  made  available  as  defence  to  an  action  on  the 
covenant  by  the  mortgagee  (g). 

Contribution  where  separate  insurances  by  mortgagor  andjnortgagee. — 
Where  both  mortgagee  and  mortgagor  have  insured  separately,  as 
may  still  happen  in  equitable  mortgages,  the  insurers  usually  in- 
sist on  coiitributlon.  This  is  not  strictly  correct,  as  the  interests 
insured  are  different ;  but  it  is  clear  that,  if  both  are  allowed  to  re- 
cover, one  must  profit  by  the  fire  if  the  sum  of  the  policies  exceed 
the  value  of  the  property.  Strictly  speaking,  the  proper  course 
would  be  for  the  mortgagee's  insurer  to  pay  in  full,  and  proceed 
against  the  mortgagor  for  the  amount  paid.  The  mortgagor  would 
be  entitled  to  retain  any  balance  on  the  proceeds  of  his  own  policy 
as  the  value  of  liis  equity  of  redemption.  But  the  offices  prefer  to 
treat  each  other  as  co-insurera  in  such  a  case.  And  the  Convey- 
ancing Act  has  made,  as  between  mortgagor  and  mortgagee, 
insurance  practically  run  *with  the  land,  as  has  been  [*  29(j] 
held  by  James,  L.  J.,  phould  be  the  case  (g). 

Mortgagee  of  leaseholds  coidd  not  be  heard  against  forfeiture  before 
Cmveyancing  Act,  1881 ;  it  is  otherwise  since  the  Act. — The  mortgagee 
of  a  leasehold  interest  who  is  not  in  possession  could  not  before  the 
Conveyancing  Act,  1881,  be  heard  on  an  application  for  relief  against 
forfeiture  under  23  &  24  Vict.  c.  126,  s.  2,  on  the  breach  of  the  les- 
see's covenant  to  insure  (h)  in  the  lessor's  action  against  the  lessee, 
and  could  not  be  made  a  party  to  the  action  of  ejectment  under 
Ord.  xvi.  r.  13,  J.  A.  1875 ;  and  it  was  said  by  Lush,  J.,  that  if  the 
mortgagee  had  any  equity  he  nmst  pursue  it  as  a  suitor.  But  in  s. 
14  of  the  Conveyancing  Act,  1881,  the  word  "  lessee  "  includes  his 
assignee,  and  tnerefore  a  mortgagee  by  assignment  of  leaseholds 
could  in  the  landlord's  action  or  one  brought  by  himself  apply  for 
relief  against  such  a  forfeiture,  and  the  Judicature  Act  and  Rules 
enable  him  to  come  for  relief  even  after  judgment  (i). 

In  mortgage  deeds  to  be  made  under  the  present  law,  a  covenant 
to  insure  against  fire  is  scarcely  needed  {k). 


(/)  Reported  11  Q.  B.  D. 

867. 


I,  52  L.  J.  Q.  B.  360,  49  L.  T.  N.  S.  29,  81  W.  R. 


(g)  The  Potomac,  105  U.  S.  (15  Otto)  680. 


(a)  Raymer  v.  Preston,  18  Ch.  D.  1,  50  L.  J.  Ch.  472,  44  L.  T.  N.  S.  787,  29 
W.  U.  647. 

(A)  Milh  V.  Gh-mths,  45  L  J.  Q.  B.  771. 
m  Jncquea  v.  Harrison,  18  Q.  B.  D.  166. 
(k)  Davidson  Prec  Conv.  19S. 

243 


1"! 


V    §. 


m 

.1'    ! 


*298 


THE  LAWS  OF  INSURANCE. 


11 

I  I 


[*297] 


♦CHAPTER  XIII. 


FraE  POLICIES  AND  ASSIGNMENT. 


Rights  of  assignor  and  assignee  to  policy  after  assignment  of  property.— 
If  the  assignment  of  property  insured  against  fire  be  total,  the  as- 
gignor  cann<j|t  recover  on  the  policy  for  himself,  as  his  interest  in 
the  property  will  have  ceased. 

If  the  assignment  be  partial,  he  can  recover  for  his  own  benefit 
only  to  the  extent  of  his  remaining  interest. 

The  assignee  of  property  insured  against  fire  can  recover  nothing 
under  a  policy  effected  by  the  assignor  unless — 

(1)  It  was  part  of  the  contract  between  the  assignor  and  assignee 
that  the  latter  should  have  the  benefit  of  the  policy  as  between  as- 
eignor  and  himself. 

(2)  The  office  consented  to  hold  the  assignee  assured  either  by 
the  terms  of  the  policy,  or  on  notice  of  the  intention  to  assign  be- 
fore transfer  of  the  property. 

(3)  If  the  policy  expresses  that  the  consent  of  the  office  will  be 
given  in  any  particular  form,  that  form  must  be  strictly  complied 
with.    Nor  can  a  vendor  recover  on  his  policy  for  the  benefit  of  the 

Eurchaser  after  he  has  been  paid  the  purchase-money  in  full,  though 
e  has  not  conveyed,  and  even  if  it  be  part  of  the  contract  of  sale 
that  the  vendor  snail  keep  alive  the  policies  for  the  benefit  of  the 
purchaser,  and  assign  them  to  the  purchaser  (a).  Under 
[*  298]  such  a  contract,  *however,  the  vendor  would  be  bound  to 
get  the  insurer's  consent,  if  he  could,  to  the  transfer,  or  to 
effect  a  new  policy  for  the  purchaser's  benefit,  and  would  be  liable 
for  neglect  to  do  so. 

Assignability  of  policies. — Policies  of  insurance  are  choses  in  action, 
giving  as  they  ao  the  right  to  proceed  in  a  court  of  law  to  recover 
the  money  thereby  contracted  to  be  paid  (c).  "  A  policy  certainly 
must  be  transferred,  for  though  a  chose  in  action  cannot  in  la  w  be 
assigned,  yet  in  equity  it  may ;  therefore  we  will  permit  the  action 
•to  be  brought  by  the  trustees  "  (d). 

Insurer^ a  consent  necessary  to  assignment  of  policy. — The  rule  in 
equity  that  choses  in  action  are  assignable  does  not,  however,  apply 
to  every  form  of  policy.    For  it  seems  universally  to  have  oeen 

(a)  New  South  Wales  Bank  v.  Commercial  Union  (No.  2),  8  N.  S.  W.  Law 
60,  wherein  the  English  and  American  law  is  fully  and  noly  discussed. 

(c)  Ex  parte  Ibbetson,  8  Ch.  D.  519,  89  L.  T.  N.  S.  1,  20  W.  R.  848. 

{a)  Words  used  in  Delaney  v.  Stoddart.  1  T.  R.  26  (1785),  per  Akhurst,  J. 
The  statutes  dealing  with  assignment  of  life  and  mr>rine  policies  do  not.  give  the 
light  to  assign,  but  prescribe  the  mode  of  assignment 

244 


FIBE  POLICIES  AND  ASSIGNMENT. 


*299 


held  that  fire  policies  are  personal  contracts  (e),  and  that  the  con- 
gent  of  the  insurers  is  necessary  to  the  assignment  thereof;  while 
marine  policies  have  always  been  assignable  with  their  subject-mat- 
ter, and  life  policies  have  been  treated  as  reversionary  interests,  and 
allowed  to  be  assigned,  charged,  or  otherwise  dealt  with  (/).  The 
Judicature  Act,  1873,  makes  no  change  in  this  respect,  merely  pro- 
viding a  mode  by  whicii  the  assign,  if  any,  of  a  chose  in  action, 
may  perfect  his  legal  title  to  sue  thereon,  instead  of  trusting  to  his 
equitable  interest  under  the  legal  title  of  his  assignor  (gr). 

Asdgriment  of  fire  policies. — Insurers  seem  from  the  earliest  times 
of  fire  insurance  to  have  been  careful  to  prevent  fire  policies 
from  *being  assigned  without  license.  But  for  special  re-  [*  289] 
strictions  on  assignment  in  the  policy  itself  (upon  which  the 
old  cases  of  Lynch  v.  DcUzell  (h)  and  ScuUers  (Jo.  v.  Badcock  (t)  seem 
to  go),  there  is  no  apparent  reason  why  a  fire  policy  should  not  be 
assignable  with  the  subject-matter  thereof  as  readily  as  a  marine 
policy  has  always  been,  except  that  in  land-risks,  where  the  sub- 
ject-matter is  usually  within  the  control  of  the  assured,  his  personal 
character  is  of  more  importance  than  in  sea-risks,  where  the  goods, 
<Sk!.,  from  the  moment  that  they  go  to  sea,  are  out  of  his  reach. 

If  vendor  of  chattels  sell  before  the  loss  he  cannot  recover  on  policy. — 
The  contract  of  fire  insurance  being  a  contract  of  indemnity,  no 
01)6  can  recover  in  respect  of  the  loss  who  is  not  interested  in  the 
flubject-matter  of  the  insurance  at  the  time  such  loss  occurs.  Ven- 
dee has  no  interest  in  policy  unless  by  assignment. — Therefore,  if  a  per- 
son assigns  away  his  interest  in  a  ship  or  goods  after  effecting  a 
policy  of  insurance  upon  them,  and  before  the  loss^  he  cannot  re- 
cover the  insurance-money  from  the  insurers  for  his  own  benefit 
(i^);  "and  on  the  sale  of  a  thing  insured,  no  interest  in  the  policy 
passes  to  the  vendee  unless  at  the  time  of  the  sale  the  policy  be 
asbigned  either  expressly  or  impliedly  "  (Q. 

If,  ho;vever,  the  policy  was  actually  assigned  or  handed  over  to 
the  vendee,  or  if  there  was  a  stipulation  that  the  vendor  should 
assign  it  to  or  keep  it  alive  for  the  benefit  of  the  vendee,  the  latter 
would  be  entitled  to  the  loolicy-money  on  the  loss  occurring.  The 
assignment,  however,  by  the  vendor,  or  its  equivalent,  must  be 

(e)  Lynch  v.  Dalxell,  4  Bro.  P.  C.  431  (1729) .  Sadlers  Co.  v.  Badcock,  2  Atk. 
554, 1  Wils.  10.  Ra,yner  v.  Preston,  18  Ch.  D.  1,  per  Brett,  L.  J.,  50  L.  J.  Oh. 
472,44L.T.  N.S.  787. 

(/)  PelUts  V.  Neptune  Co.,  6  C  P.  D.  84,  29  W.  R.  547,  49  L.  J.  C.  P.  153,  42 
L.  T.  N.  S.  85,  28  W.  R.  405.  See  the  difference  between  the  assignability  of  fire 
and  life  policies  stated  iu  Mutual  Life  Insurance  Co>  v.  AUen,  52  Am.  Rep.  247| 
188  Mass.  24. 

(g)  S.  25,  sub-B.  6. 
(A)  4  Bro.  P.  C.  481. 

(t)  2  Atk.  654.    See  Miall  v.  Western  Insurance  Co.,  19  U.  C.  (C'P.)  270. 
(k)  Pbtoles  V.  Innes,  11  M.  &  W.  10,  12,  L.  J.  Ex.  108. 
(0  North  of  England  Oilcake  Co.  v.  Archangle,  Jtc,  Co,  L.  R.  10  Q.  B.  255. 
per  Quain,  J.,  44  L.  J.  Q.  B.  121,  24  W.  B.  162,  82  L.  T.  N.  S.  501. 

246 


'.  i\ 


in 


!     }     :!.■ 


*301 


THE  LAWS  OF  INSURANCE. 


made  or  take  place  before  the  property  has  actually  passed  from 
the  vendor  to  the  vendee ;  for  an  assignment  made  after  the 
[*  300]  interest  of  the  vendor  in  the  subject-matter  of  the  ♦insur- 
ance has  ceased,  cannot  operate  to  give  the  assignee  an  in- 
terest  in  the  policy  (m). 

In  the  two  old  leading  cases  on  this  subject  (n),  the  original  as- 
sured had  parted  with  his  interest  in  the  property  insured  before 
the  happening  of  the  fire,  and  had  subsequently  to  the  fire  at- 
tempted to  give  his  assigns  the  benefit  of  his  policy. 

Assured's  consent  necessary  to  transfer  of  policy. — The  policy,  if  as- 
signed  at  all  before  the  loss,  must  be  assigned  with  the  property 
which  it  covers.  Such  assignment  will  operate  only  by  consent  of 
the  insurers,  and  the  insurers  will  not  assent  without  proof  of  the 
assent  of  the  original  assured.    This  is  required  for  two  reasons— 

(1)  That  it  is  common  for  the  companies  to  permit  transfer  of  a 
policy  to  other  goods,  if  the  goods  first  covered  are  assigned  during 
Its  currency,  and  that,  if  they  permitted  the  first  policy  to  enure  lo 
the  benefit  of  the  assignee,  they  would  make  themselves  liable  *^ 
double  claim  (o). 

(2)  That  they  may  have  clear  proof  that  the  assignment  is  in 
the  bargain  as  to  the  goods,  and  that  the  assignee  is  not  simply 
helping  himself  to  the  policy  as  a  mere  accessory,  and  without  any 
assent  thereto  on  the  part  of  the  assignor. 

Fire  policies,  when  assignable.  Insurer's  acquiescence  in  assignment  is 
optional. — Although  in  certain  circumstances  Equity  will  recognize 
the  assignment  of  a  fire  policy  (p),  such  right  is  subject  to  the 
special  stipulation  of  the  particular  contract,  and  no  right  to  assign 
before  loss  so  as  to  bind  the  insurer  can  arise  under  a  policy  against 
fire  in  the  ordinary  form  by  which  the  insurers  bind  themselves  to 
pay  the  insured,  his  executors  and  administrators,  and  con- 
[*  301]  tains  a  condition  that  no  assignment  will  be  valid  ^unless 
accepted  (such  acceptance  being  testified  in  a  prescribed 
way)  by  the  insurer.  The  insurer  cannot  be  made  to  accept  any 
assign  Iq).  It  is  pure  matter  of  favour  for  him  to  continue  the  in- 
surance, and  the  contract  is  a  new  contract. 

Does  fire  policy  run  with  landf — The  view  that  afire  policy  runs 
with  the  land  has  not  yet  found  favour  with  the  Courts.  But  it  is 
fully  and  very  forcibly  put  forward  by  James,  L.  J.,  in  Rayner  v. 
Preston  (r).    In  a  dissenting  judgc^Mii,  his  lordship  considered  that 


(to)  North  of  England  Oilcake  Co.  v.  A'nhangel,  d'c,  Co.,  uhi  sup. 
(n)  Sadlers  Co.  v.  Badcock,  2  Atk.  644,  i  Wils.  10.    Lynch  v.  Dalzell,  i  Bro. 
P.  C  431. 

(o)  Miallv.  Western  Insurance  Co.,  19  U.  C.  (C.  P.)  270 

(»)  Rayner  v.  Preston,  18  Ch.  D..  per  Brett,  L.  J,,  10,  50  L.  J.  Ch.  472,  44 
L.  T.  N.  8.  787,  29  W.  R.  547. 

(q)  N.  S.  Wales  Bank  v.  North  Brit.  Mercantile  Co.,  3  N.  S.  W.  Law  60.  In 
America  he  may  not  refuse  hia  assent  without  reasonable  grounds. 

(r)  18Ch.  D.  12. 

246 


FIBE  POLICIES  AND  ASSIGNMENT. 


*302 


a  contract  of  fire  insurance  should  be  held  to  run  with  the  land, 
and  enure  to  the  benefit  of  the  person  from  time  to  time  interested 
therein.  It  runs  with  the  interest  insured  provided  that  the  owner 
of  the  interest  is  acceptable  to  the  insurers. 

Loss  of  fire  falls  on  purchaser  where  vendor  lets  insurance  expire. — If 
after  the  contract  of  purchase,  and  before  the  conveyance,  the  prop- 
erty is  destroyed  by  fire,  the  loss  will  fall  upon  the  purchaser, 
although  the  houi?e8  were  insured  at  the  time  of  the  agreement  for 
sale,  and  the  vendor  permitted  the  insurance  to  expire  without  giv- 
ing notice  to  the  purchaser.  If,  however,  the  vendor,  has  before  the 
fire  broken  his  contract,  e.  g.,  to  repair  or  alter  the  property,  the 
subsequent  loss  will  not  fall  on  the  purchaser  («). 

The  first  business  of  a  purchaser  is  therefore  either  to  insure  as 
from  the  date  of  his  contract  or  to  take  an  agreement  to  insure 
from  the  vendor. 

As  the  law  now  stands,  the  bt^nefit  of  a  fire  policy  does  not  pass 
to  a  purchaser  without  an  express  contract  to  that  effect  (t).  It  is 
not  an  accessory  of  the  original  property  passing  by  an  assignment, 
but  a  right  of  recourse  to  the  insurer  on  loss  or  damage  to 
the  *property  insured ;  and  while  the  vendor  cannot  profit  [*  302] 
by  the  policy  after  a  conveyance  of  the  property,  or  recover 
uponitso  as  to  get  paid  twice  over  (m),  intheopinion  of  Lord  Justices 
Brett  and  Cotton  (v),  no  eq^uity  subsists  between  the  vendor  and 
purchaser,  in  the  absence  ot  contract  between  them,  entitling  the 
purchaser  to  the  benefit  of  a  fire  policy  effected  by  the  vendor;  and 
it  may  be  added,  that  if  the  purchaser  of  the  property  had  the  ben- 
efit, he  would  get  for  nothing  a  protection,  which  had  been  pur- 
chased by  the  vendor  for  valuable  consideration,  in  the  shape  of 
premium. 

French  law. — The  French  law  is  otherwise,  and  holds  the  policy  to 
be  accessory  and  to  pass  with  the  property  (a;). 

Rayner  v.  Preston. — The  law  on  this  point  is  by  no  means  satis- 
factory. In  Rayner  v.  Preston  the  vendor  of  property,  burnt  before 
completion,  recovered  the  insurance-money  and  declined  to  give  the 
benefit  of  tne  policy.  But  if  the  purchaser  had  applied  to  the  in- 
surance ofiice  under  s.  83  of  the  old  Metropolitan  Building  Act  (14  Geo. 
III.  c.  78),  he  could,  as  a  person  interested  in  the  property,  havecom- 

(«)  Sugden  V.  &  P.  (14th  ed.)  291. 

(<)  Poole  V.  Adams,  12  W.  R.  683,  10  L.  T.  N.  S.  287.  North  of  England 
Pure  Oilcake  Co.  v.  Archangel  Maritime,  L.  R.  10  Q.  B.  249,  44  L.  J.  Q.  B. 
181,  32  L.  T.  N.  S.  561,  24  W.  R  16?.  Itajfuer  v.  Preston,  18  Ch.  D.  1,  50  L.  J. 
Ch.  472,  44  L.  T.  N.  S.  787,  29  W.  R.  647. 

{u)  Castellain  v.  Preston,  11  Q.  B  D.  880,  49  L.  T.  N.  S.  29,  62  L.  J.  Q.  B. 
866,  31  W.  R.  557.  See  also  Collingridge  v.  Royal  Exchange,  8  Q.  B.  D.  173, 
47  L.  J.  Q.  B.  82,  37  L.  T.  N.  8.  526,  26  W.  R.  1 12. 

(»)  Rayner  v.  Preston,  18  Ch.  D.  1,  60  L.  J.  Ch.  472.  44  L.  T.  N.  S.  787,  29 
W.  R.  547. 

(x)  See  Stanton  t.  Home  Ins.  Co.,  24  Lr.  Can.  Jur.  88.  Canada  Civil  Codet 
arts,  2488,  2676. 

m 


'Hi 


S04 


THE   LAWS  OF  INSURANCE. 


pelled  reinstatement.    (It  was  upon  this  ground  that  James,  L.  J. 
considered  that  a  contract  of  fire  insurance  should  he  held  to  ruil 
with  the  land  and  come  to  the  benefit  of  the  firm  from  time  to  time 
interested  therein).    Rights  of  vendor  and  purchaser  on  sale  of  property 
insured— So  in  fact  the  vendor  has  a  good  title  against  the  insurer 
lo  recover  under  the  policy ;  and  by  Paine  v.  Meller  (y)  he  has  a 
j:ood  title  against  the  purchaser  to  recover  the  contract  price  in  re- 
ppect  of  the  thing  destroyed ;  but  if  he  receives  the  purchase-money 
he  will  have  sustained  no  loss  by  the  fire,  and  may  be  com- 
[*  303]  pelled  to  refund  to  the  insurers  the  amount  *which  they 
paid  him  as  an  indemnity  against  his  lo^  (z). 
Opinion  of  Cotton,  L.  J., — In  Rnyner  v.  Preston,^  above  cited,  Cot- 
ton, L.  J.,  said:    "The  contract  [of  sale]  passes  all  things  b.lon<». 
ing  to  the  vendor  appurtenant  to  or  necessarily  connected  with  tfe 
use  and  enjoyment  of  the  property  mentioned  in  the  contract,  but 
not,  in  my  opinion,  collateral  contracts,  and  such  at  least  indepen- 
dently  of  the  Act  14  Geo.  III.  c.  78,  the  policy  of  insurance  is.    It 
is  not  a  contract  limiting  or  affecting  the  interest  of  the  vendors  in 
the  property  sold,  or  afiecting  their  right  to  enforce  the  contract  for 
sale ;  for  it  is  conceded  that  if  there  were  no  insurance,  and  the 
buildings  sold  were  burnt,  the  contract  for  sale  would  be  enforced. 
It  is  not  even  a  contract  in  the  event  of  a  fire  to  repair  the  build- 
ings, but  a  contract  in  that  event  to  pay  the  vendors  a  sum  of  money 
which,  if  received  by  them,  they  may  apply  in  any  wa^  they  think 
fit.    It  is  a  contract  not  to  repair  tfhe  damage  to  the  building,  but  to 
pay  a  sum  not  exceeding  the  sum  insured,  or  the  money  value  of 
the  injury.    In  my  opinion,  the  contract  of  insurance  is  not  of  such 
a  nature  as  to  pass  without  apt  words  under  a  contract  for  sale  of 
the  thing  insured.    ....    An  unpaid  vendor  is  a  trustee  in  a 
qualified  sense  only,  and  is  so  not  only  because  he  has  made  a  con- 
tract which  a  Court  of  Equity  will  give  eflect  toby  transferring  the 
property  sold  to  the  purchaser,  and  so  far  as  he  is  a  trustee  he  is  so 
onl^  in  respect  of  the  property  contracted  to  be  sold.    Of  this  the 
policy  is  not  a  part." 

Mortgage  of  insured  property. — Where  the  property  insured  against 
fire  is  conveyed  by  way  of  charge  only,  the  interest  of  the  insured 
is  not  defeated  (a).  It  is  provided  by  the  Conveyancing 
[*  304]  Act  *of  1881  (6)  that  the  holder  of  such  charge  can,  in  addi- 
tion to  his  other  rights,  require  the  proceeds  of  any  insurance 
effected  on  the  property  by  the  mortgagor,  where  no  express  agree- 
ment has  been  made  to  the  contrary,  to  be  applied  in  or  towards 
the  discharge  of  the  money  due  under  the  mortgage. 

(y)  6  Ves.  849.    And  see  Gillespie  v.  Miller,  1  C.  S.  C.  (4th  series)  423, 

(a)  Castellain  v.  Preston,  11  Q.  B.  D.  880,  52  L.  J.  Q.  B.  866,  49  L.  T.  N.  S. 
29,  81  W.  R.  567. 

(a)  Burton  v.  Gore  District  Mutual,  12  Grant  (U.  C)  166,  where  the  assured 
mortgaged  and  assigned  his  policy  with  the  insurer's  consent,  and  thereafter  ef. 
fected  tresh  insurance. 

(6)  44  &  45  Vict,  c-  41,  a.  23  (4). 

248 


FIRE  POLICIES  AND  ASSIGNMENT. 


*305 


Bight  to  policy-moneys  passing  with  beneficial  interest.— 1(  legatees  or 
devisees  under  a  will,  or  the  widow  or  heir-at-law  or  next-of-kin 
under  an  intestacy,  have  a  vested  interest  in  real  or  personal  estate 
which  has  been  insured,  it  would  seem,  though  it  has  not  been  ex- 
pressly decided,  that  the  proceeds  of  any  policy  thereon,  in  case  of 
a  fire  after  the  testator's  or  intestate's  death,  will  be  held  by  the  ex- 
ecutor or  administrator  for  the  benefit  of  the  person  or  persons  bene- 
ficially entitled  (c).  The  money  clearly  represents  the  goods  or 
land,  and,  if  payable  at  all,  should  be  payable  to  the  beneficial 
owner  at  the  time  of  the  fire.  If,  in  the  case  of  chattels,  the  chat- 
tels perish  in  the  life  of  the  testator,  or  the  testator  and  chattels 
perish  together,  it  would  seem  that  the  legatees  thereof  will  not  be 
entitled  to  the  insurance-money. 

The  right  of  action  may  be  only  in  the  representative,  but  the 
proceeds  recovered  by  him  represent  the  subject  of  the  insurance, 
and  are  held  by  him  on  trust  for  those  beneficially  interested  in  the 
estate  (d). .... 

Mercantile  policies  assignable.  Rule  for  calculating  loss  on  mercantile 
policies. — Mercantile  policies  on  goods,  &c.,  usually  called  floating 
policies,  are  assignable  hy  permission  of  the  insurers  in  the  same 
way  as  ordinary  fire  policies,  from  which  they  do  not  in  reality 
difier  except  in  the  mode  in  which  damage  is  estimated,  and  in  the 
interests  wnich  they  cover.  In  the  case  of  policy  on  goods 
with  liberty  *to  charge  the  cargoes,  the  mode  of  calculating  [*  305] 
the  amount  payable  in  case  of  loss  is  usually  as  follows, 
viz. :— The  whole  value  of  goods  afloat,  and  covered  by  the  policy, 
must  be  taken,  and  the  assured  will  recover  such  a  proportion  of 
their  loss  as  the  full  amount  insured  bears  to  the  value  of  all  the 
property  afloat  a4)  the  time  of  the  accident,  if  that  value  exceed  the 
full  amount  insured ;  if  not,  the  assured  will  be  entitled  to  the 
whole  amount  lost  (e). 

(c)  Culbertson  v.  Cox,  43  Am  Rep.  204.  Wyman  v.  Wyman,  26  N.  Y.  263. 
Parnj  v.  Ashley,  3  Sim.  97.  Durrani  v.  Friend,  5  De  G.  &  S.  343,  21  L.  J.  Ch. 
853,  19  L.  T.  152,  16  Jur.  709,  commented  on  in  Rayner  v.  Preston,  18  Ch.  D.  1, 
60  L.  J.  Ch.  472,  44  L.  T.  N.  S.  787,  29  W.  R.  547. 

(d)  Parry  v.  Ashley,  8  Sim.  97.  Mildmay  v.  Folgham,  3  Ves.  Jun.  472,  but 
see  comments  thereon  in  Culbertson  v.  Cox,  43  Am.  Rep.  at  p.  209. 

(e)  Crowley  v.  Cohen,  8  B.  &  Ad.  478,  1  L.  J.  K.  B.  158,  per  Tenterden,  C.  J. 
Joyce  V.  Kennard,  L.  B.  7  Q.  B.  78,  41  L.  J.  Q.  B.  17,  25  T.  L.  N.  S.  932,  20 

R.233. 


'is? 

ifi! 


'  .       ? 


249 


♦  307 


THS  LAWS  OF  INSURANCE. 


1*306] 


♦CHAPTER  XVII. 


DISPOSITION  OP  LIFE  POLICIES. 


Life  policies  securities  for  money. — Policies  of  life  assurance  are 
treated  as  securities  for  money  (a)  payable  at  a  date  uncertain  but 
calculable.  The  sum  insured  (apart  from  bonuses)  is  certain;  the 
premium  or  consideration  for  its  payment  is  also  certain ;  and  the 
time  when  the  money  is  payable  is  certain  to  accrue :  "  Nihil  certius 
morte,  nihil  incertius  hora  mortis." 

Surrender. — Their  present  value  then  is  computable,  and  assur- 
ance offices  will  accept  a  surrender  of  the  policy  at  that  sum  which 
is  called  a  surrender  value,  A  man  possessed  of  a  policy  can  also 
sell  it  to  a  third  person,  or  borrow  on  its  security. 

Assignability  of  life  policies.  Nature  of  contract.  Insurable  interest, 
when  must  exist. — Life  policies  are  now  construed  as  contracts,  not 
to  indemnify,  but  to  pay  a  certain  sum  in  a  certain  event  depend- 
ing on  the  duration  of  human  life.  If  at  the  time  when  such  con- 
tracts are  made  the  assured  has  an  insurable  interest  in  the  life  on 
which  the  contract  is  made,  the  contract  is  valid  (6),  and  will  not 
be  affected  by  the  determination  of  such  interest  before  the  hap- 
pening of  the  event  insured  against  (c). 

It  follows  from  this  that  an  assignment  of  a  life  policy 
[*  307]  would  be  valid  and  piss  to  the  assignee  the  *right  to  the 
insurance-money,  even  though  the  assignor's  interest  in  the 
life  had  ceased  before  the  date  of  the  assignment.  A  creditor  may 
insure  his  debtor's  life,  and  the  very  next  day  sell  the  policy  to  a 
third  person,  who  is  a  debtor  of  the  life  assured,  and  therefore 
would  have  had  no  assurable  interest  in  the  life  enabling  him  to 
have  effected  the  policy. 

Married  woman  may  insure  husband's  life. — Under  the  Married 
Women's  Property  Act,  1882  (d),  a  wife  may  insure  her  own  or  her 
husband's  life  for  her  separate  use,  and  the  same  and  all  benefit 
thereof  will  enure  accordingly.  In  America  also  a  married  woman 
may  insure  her  husband's  liie  and  dispose  of  the  policy,  for  "if  she 

(a)  Stokoe  v.  Cowan,  80  L.  J.  Ch.  882,  7  Jur.  N.  S.  901,  4  L.  T.  N.  S.  696,  9 
W.  R.  801,  29  Beav.  687  (1861),  per  Romilly,  M.  R.,  and  case  there  cited. 
(6)  AsMey  V.  Ashley,  8  Sim.  149,  per  Shadwell,  V.  C.  (1829). 

(c)  Dalby  v.  India  and  London,  15  C.  B.  366,  24  L  J.  C.  P.  2,  18  Jur.  1024, 
24  L.  T.  0.  S.  182,  8  W.  R.  116.  Law  v  London  Indisputable,  1  K.  &  J.  223, 
24  L.  J.  Ch.  196,  1  Jur.  N.  S.  179,  3  W.  R.  156,  24  L.  T.  208.  But  see  Vezina  v. 
New  York  Life,  6  Canada  80. 

(d)  46  &  46  Vict.  c.  76,  s.  11. 

m 


DISPOSITION   OF  LIFE  POLICIES. 


*308 


pays  the  premium  out  of  lier  own  pocket,  it  is  hard  to  see  why  she 
should  not  be  pblo  to  assign  the  policy  "  (e). 

Interest  in  policy  on  own  life. — A  policy  on  a  man's  own  life,  ex- 
pressed to  be  payable  to  his  executors  or  administrators,  is  a  re- 
versionary interest  (/),  certain  to  fall  in  on  the  aesured's  own  death 
or  attainment  of  the  stipulated  age.  It  forms  part  of  the  estate  of 
the  assured,  being  money  due  and  owing  to  him  at  his  death  (g), 
and  may  be  dealt  with  at  his  absolute  discretion — sold,  charged, 
settled  (h),  given  away  (i),  bequeathed  (A),  or  made  subject  of  a 
donatio  miortis  causa  (l),  and  passes  to  his  trustee  in  bankruptcy  (m). 
Policy  assignable  before  payable. — The  fact  that  the  money  secured  by 
the  policy  has  not  become  due  does  not  affect  the  right  to  assign  or 
the  possibility  of  an  absolute  assignment  («). 

*A  policy,  though  a  chose  in  action  (o),  is  not  within  the  [*  308] 
order  and  disposition  clause  of  the  Bankruptcy  Acts,  1869 
and  1883  (o),  nor  a  negotiable  instrument  (p).  The  legal  title  to  a 
policy  of  life  assurance  can  be  obtained  by  assignment  in  accord- 
ance with  the  Policies  of  Life  Assurance  A  a,  or  s.  25,  sub-s.  G,  of 
the  Judicature  Act,  1873.  An  assignment  upon  trust  may  be  an 
absolute  assignment  within  the  latter  Act,  and  the  assignee  under 
such  an  assignment  can  give  a  good  discharge  for  the  policy- 
moneys  (q). 

Donatio  mortis  causd.  Inter  vivos. — A  life  policy  has  been  held  a 
proper  subject  of  donatio  mortis  cattsa  (r)  on  account  of  its  analogy 
to  a  bond.  And  it  would  seem  that  trover  cannot  be  maintained 
for  it  by  the  executor  or  administrator  of  the  assured  (r),  if  the 
latter  has  given  it  away  without  writing  during  his*  lifetime  (s) ; 
but,  on  the  other  hand,  a  person  to  whom  it  has  simply  been 
banded  without  writing  by  the  assured  in  his  lifetime  cannot  re- 

(e)  Chapin  v.  Fellows,  36  Conn.  132,  4  Am.  Rep.  49. 

(/)  But  see  Rawhone's  Will,  3  K.  &.  J.  800,  476,  3  W.  R.  796,  26  L.  J.  Ch. 
509,  29  L.  T.  155. 
{g)  Felly  v.  Wilson,  17  W.  R.  778,  4  Ch.  App.  674. 

(A)  Sewell  v.  King,  14  Ch.  D.  179,  28  W.  R.  344.         » 

\i)  Rummens  v.  Hare,  1  Ex.  D.  169,  34  L.  T.  N.  S.  407,  24  W.  R.  385. 

(Jt)  M'Donald  v.  Irvine,  8  Ch.  D.  101,  47  L.  J.  Ch.  494,  38  L.  T.  N.  S.  155, 
26  W.  R.  381. 

(I)  Amis  V.  Witt,  33  Beav.  619.  Witt  v.  Amis,  1  B.  &  S.  109,  30  L.  J.  Q.  B. 
318,  9  W.  R.  691,  7  Jur.  N.  S.  499,  4  L.  T.  N.  S.  283. 

ivi)  Jackson  v.  Forster,  1  E.  &  E.  463,  29  L.  J.  Q.  B.  8,  33  L.  T.  290,  7  W. 
R.  678. 
(m)  Brice  v.  Bannister,  3  Q.  B.  D.  569,  38  L.  T.  N.  S.  739,  26  W.  R.  670. 
(o)  Ex  parte  Ibbetson,  8  Ch.  D.  519,  39  L.  T.  N.  S.  1  26  W.  R.  843. 

(p)  Strachan  v.  M^DougU  (1835).  13  C  S.  C  (Ist  series)  964.  United  King- 
dom Life  V.  Dixon  (1838),  16  C.  S.  C.  (Ist  series)  1277. 

(q)  Burlinson  v.  Hall,  12  Q  B.  D.  347. 
(r)  Witt  V.  Amis,  ubi  sup  note  (/). 

(s)  Rummens  v.  Hare,  1  Ex.  D.  (C.  A.)  169,  34  L.  T.  N.  S.  407,  24  W.  R. 
885.    Barton  v.  Oainer,  8  H.  &  N.  887,  27  L.  J.  Ex.  890,  6  W.  R.  6si4. 

251 


*310 


THE  LAWS  OF  INSURANCE. 


I  <i 


cover  from  the  assurers  thereon  (t).  If  the  executor  or  adminis' 
trator  has  subsequently  regained  possession  of  it,  he  can  give  a 
good  discharge  to  the  insurers,  but  not  otherwise  (u). 

(rift  of  life  policy  and  retention  of  same  by  donor. — Where  a  man 
effected  an  insurance  on  his  own  life  but  in  his  daughter's  name, 
and  paid  the  premiums  himself,  though  he  retained  the  policy  iii 
his  own  possesion,  it  was  held  a  complete  gift  to  his  daughter,  and 

on  hid  death  she  was  held  entitled  to  the  insurance-money 
[*  309]  (x).    In  this  case  a  polic}  of  life  assurance  was  *effected 

by  a  man  on  his  own  life,  but  in  his  daughter's  name,  and 
up  to  the  time  of  his  death  he  retained  the  policy  in  his  own  posses- 
sion and  paid  all  the  premiums  himself  from  time  to  time,  except 
the  last,  which  was,  through  his  want  of  funds,  paid  by  his  son. 
Tnere  was  no  mention  of  the  policy  in  the  will  of  the  assured ;  but 
he  communicated  the  fact  of  the  insurance  to  his  daughter,  and 
gave  her  to  understand  that  it  was  for  her  benefit.  Kay,  J.,  said 
*'  that  the  legal  right  to  call  upon  the  office  to  pay  was  clearly  in 
the  daughter,  and  not  in  the  executor,  the  contract  of  the  assurance 
company  having  been  to  pay  her.  That  she  was  the  daughter  was 
sufficient  to  raise  a  presumption  that  the  advance  was  to  her,  and 
the  only  thing  that  could  be  relied  on  to  rebut  this  presumption  of 
advancement  was  the  fact  that  the  father  kept  the  policy  in  his  own 
hands.  But  that  was  not  sufficient.  The  mere  retention  of  the 
policy  did  not  show  that  the  beneficial  interest  also  was  not  in- 
tended to  pass  to  her.  Thus  the  gift  of  the  policy  to  the  daughter 
was  &  complete  one,  for  the  legal  and  the  beneficial  interest  were 
vested  in  her."  Accordingly  she  was  entitled  to  receive  the  sum 
assured. 

In  Fortescue  v.  Bamett  (y)  the  assured  made  a  voluntary  assign- 
ment by  deed  of  a  policy  upon  his  own  life  to  trustees,  for  the  ben- 
efit of  his  sister  and  her  children  if  she  or  they  should  outlive  him. 
The  deed  was  delivered  to  one  of  the  trustees,  and  the  grantor  kept 
the  policy  in  his  own  possession.  No  notice  of  the  assignment 
was  given  to  the  insurance  office,  and  the  assured  afterwards  sur- 
rendered for  a  valuable  consideration  the  policy  and  a  bonus  de- 
clared upon  it  to  the  insurance  office ;  and  the  Court  held  that  upon 

the  delivery  of  the  deed  no  act  remained  to  be  done  by  the 
[*  310]  grantor  to  give  effect  to  the  assignment  *of  the  policy,  and 

that  he  was  bound  to  give  security  to  the  amount  of  the 
value  of  the  policy  assured  by  the  deed.  The  Master  of  the  Rolls 
said:  "The  gift  of  the  policy  appears  to  me  to  have  been  perfectly 
complete  without  delivery.    Nothing  remained  to  be  done  by  the 

(t)  Howes  V.  Prudential,  49  L.  T.  N.  S.  138.  0' Harass  Tontine,  80  L.  T.  128, 
8Jur.  N  S.  1145,  6  W.  R.  45. 

(u)  Conway  v.  Britannia  Co.,  8  Lr.  Can.  Jur.  162. 

(a:)  Weston  v.  Richardson,  47  L.  T.  N.  S.  514. 

(y)  3  M.  &  K.  36,  2  L  J.  N.  S.  Ch.  98.  Sewell  v.  King,  14  Ch  D.  179,  28  W. 
R  844. 

252 


DISPOSITION  OF  LIFE  POLICIES. 


*311 


grantor,  nor  could  he  have  done  what  he  afterwards  did  to  defeat 
his  own  grant  if  the  trustees  had  given  notice  of  the  aesignment  to 
the  insurance  office.  I  am  of  opinion  that  no  act  remained  to  he 
done  to  complete  the  title  of  the  trustees.  The  trustees  ought  to 
have  given  notice  of  the  assignment,  but  their  omission  to  give 
notice  cannot  effect  the  cestui  que  trustent" 

Assignment,  how  made. — No  particular  words  are  necessary  to  con- 
stitute an  equitable  assignment  of  a  policy  of  life  insurance  if  the 
intention  be  clear ;  and  such  an  assignment  may  even  be  created 
by  word  of  mouth,  and  an  equitable  mortgage  may  also  be  created 
by  the  deposit  of  a  policy  of  assurance  so  as  to  entitle  the  depositee 
to  the  moneys  assured  (z).  The  pledge  of  a  fire  policy  as  collateral 
security  is  not  an  assignment  within  the  condition  prohibiting  as- 
signment (a). 

To  perfect  the  title  of  the  mortgagee  of  a  policjr,  notice  in  writing 
should  be  given  to  the  insurance  office  of  the  assignment,  otherwise 
a  subsequent  assignee  for  value  might,  by  first  giving  notice,  obtain 
priority  (6). 

By  what  law  construed. — The  validity  of  the  assignment  will  be 
governed  by  the  law  of  the  place  where  it  was  made.  And  the  par- 
ties thereto  were  domiciled.  Hence,  where  a  life  policy,  granted  by 
an  English  insurance  company  to  the  assignor,  was  by  him 
assigned  in  Cape  Colony  to  his  *wife  they  being  domiciled  [*  311] 
there,  the  assignment  was  held  invalid  in  England,  because, 
by  the  law  of  Cape  Colony,  it  was  void  by  reason  of  the  assignor 
and  assignee  being  husband  and  wife  (c). 

Assignee  may  sw.  in  own  name. — The  Policies  of  Azsutaace  Act, 
1867  (d),  gives  the  right  to  sue  in  their  own  names  to  any  person 
or  corporation  entitled  by  assignment  or  other  derivative  title,  and 
J  -essing  at  the  time  of  action  brought  the  right  in  equity  to  re- 
ceive and  give  an  effectual  discharge  for  the  policy-moneys. 

P^iciea  of  Assurance  Act,  1867.  Assignability. — The  effect  of  this 
Ac  d  not  to  make  life  policies  more  or  less  assignable  than  before; 
it  only  enables  the  assignee  to  sue  in  his  own  name  without  having 
to  use  the  name  of  the  assignor,  and  protects  the  insurance  offices 
by  making  notice  of  assignment  necessary.  In  the  words  of  Lord 
Bramwell  wit'^  respect  to  31  &  32  Vict.  c.  86  (a  similar  Act  as  to 
marine  policies),  "  Without  the  aid  of  the  statute,  the  assign  might 
have  sued  at  law  in  the  name  of  the  assured  and  in  a  court  of 


i^l 


(«)  Row  V.  Dawson,  1  Ves.  Sen.  331.  GfumeU  v  Gardner,  4  Giff  626-680,  9 
L  T.  N.  S.  367   12  W  R.  67. 

(o)  Griffey  ^  New  York  Central  Co.,  63  Am.  Rep.  202,  65  Sickell  (N.  Y.) 
417. 

(6)  80  &  91  Vict.  c.  144,  s.  8.  Judicature  Act,  1873,  s.  25,  sub-s  6.  Swayne 
V.  Swayne,  n  Beav.  463.  Ettey  v.  Bridges,  2  Y  &  C.  Ch.  486.  Re  Barr's 
Trusts,  4  E.  &  J.  219,  6  W.  R.  424. 

(c)  Lee  V.  Abdy,  17  Q.  B  D.  809,  34  W.  R  653 ;  see  also  Mutual  Life  Insur- 
ance  Co.  t.  Allen,  62  Am.  Rep.  247,  188  Mass.  24  ;  and  Beese  v.  Mutual  Ben^t 
Co.,  28  N.  Y.  516  ;  and  cap.  xxiiipoat 

id)  80  &  81  Vict.  c.  144,  B.  1. 

253 


-  313 


THE  LAWS   OP  IXSUnANCB. 


equity  in  his  own  name.  The  statute  was  passed  to  give  the  assign 
a  more  convenient  remedy.  No  alteration  in  the  rights  of  the  par- 
ties was  contemplated  "  {e). 

Notice  of  assignment.  Life.  Fire. — Notice  of  assignment  of  a  life 
policy  to  an  agent  of  the  company  is  not,  under  the  present  law, 
sufficient  to  vest  the  legal  title  in  the  assignee  (/).  Under  the  old 
law  it  might  be  enough  if  the  agent  wa?  not  forbidden  by  the  in- 
surers to  receive  such  notice  (g\  Fire  policies  are  in  a  different 
position,  not  being  of  the  same  nature  as  life  policies,  nor  included 
in  thr  pro  vision  of  the  Policies  o  f  Life  Assurance  (1867) /.ct  (/i). 
[*  312]  *Tho  law  as  to  order  and  disposition  is  not  the  same  in 
Ireland,  to  which  country  the  Bankruptcy  Acts  of  1869  and 
1883  have  not  yet  been  extended  (i).  Cut  the  Policies  of  Life  As- 
surance Act  ap^Viies  to  the  whole  of  the  United  Kingdom,  and  the 
assignee  of  a  policy  can  thereby  perfect  his  legal  title  by  the  same 
procedure  in  any  part  thereof. 

Effect  of  assignment  of  policy  under  the  Act. — By  s.  3  of  the  Act  (j  ) 
it  is  provided  that  no  assignment  made,  after  the  passing  of  the  Act, 
of  a  policy  of  life  assurance  shall  confer  on  the  assignor,  his  execu- 
tors, administrators,  or  assigns,  any  right  to  sue  for  the  amount  of 
such  policy  until  a  written  notice  of  the  date  and  purport  of  such 
assignment  shall  have  been  givon  to  the  insurance  company  at  their 
principal  place  of  business,  or  one  of  their  principal  places  of  busi- 
ness, in  England  or  Scotland  or  Ireland ;  and  *;ne  date  on  which 
such  notice  shall  be  received  shall  regulate  thei)riority  of  all  claims 
un'^er  any  assignment;  and  a  payment  bona  fide  made  by  the  cora- 

Eany  before  the  date  on  which  such  notice  shall  have  been  received 
y  the  company  shall  bo  as  valid  against  the  assignee  as  if  the  Act 
had  not  passed. 

Notice  of  assignment. — ^The  notice  require  by  this  section  (3) 
should  be  given  even  in  the  case  of  a  mortgage  to  the  company  it- 
self, in  order  to  avoid  any  contention  aa  U)  whether  the  require- 
ments of  the  section  upon  which  the  priority  of  claims  is  made  de- 
pendent have  been  complied  with  (k). 

Act  passed  for  protection  of  companies. — ^This  statute  was  passed  for 
the  protection  of  assurance  companies,  and  not  for  the  purpose  of 
regmatmg  the  priority  of  assignees  of  policies  inter  se,  and  therefore 
the  assignee  of  a  p  ^*licy  who  had  ^iven  due  notice  to  the  company 
under  s.  3,  but  who  had  notice  of  a  prior  incumbrance,  would 
[*  313]  not  obtain  priority  over  the  ""first  incumbrancer,  although 


(e)  RluM  ,.  Ktptune  Co.,  5  C.  P.  D.  84,  40  L.  J.  C.  P    158,  42  L.  T.  N  S. 
85,  28  W.  R.  405. 
If)  80  4;  81  Vict  c  144,  bs  8.  4. 
(a)  Gale  v.  Lewis,  0  Q.  B.  780,  16  L  J.  Q.  B.  110. 
Ut)  Ex  parte  Henncsey,  1  Cotinor  k  Lawson  (Ir.)  660. 
(t)  Re  Ituaaell,  1  Cr,  &  D.  (Ir.)  27.    lie  Armstrong  and  Byrne,  1  Gr.  &  D.  (Ir.) 

*n  80  &81  V:ct.  c.  144. 
I)  Davidson's  Precedents,  vol.  2,  pt.  2,  p.  622. 

254 


\h 


DISPOSITION  OF  LIFE  POLICIES. 


*314 


the  notice  given  by  such  incumbrancer  was  not  according  to  the 

Act  (0- 

Principle  piece  of  bmineaa  to  be  on  policy. — Every  insurance  com- 
pany must  on  every  policy  specify  their  principle  place  or  places 
of  business  at  which  notice  of  an  assignment  may  bo  given  (s.  4). 

F(mn  of  assignment. — Any  assignment  may  be  made,  either  by  in- 
dorsement on  the  policy  or  by  a  separate  instrument  in  the  form 
given  in  the  schedule  to  the  Act  (s.  5). 

Company  to  ax:knowledge  receipt  of  notice. — Every  insurance  com- 
pany is  bound,  upon  the  request  in  writing  of  any  person  by  whom 
any  such  notice  was  given  or  issued,  or  of  his  executors  or  admin- 
istrators, and  upon  payment  of  five  shillings,  to  deliver  an  acknowl- 
edgement in  writing  of  their  receipt  of  such  notice ;  and  every  such 
acknowledgement,  if  signed  by  a  person  who  is  de  facto  or  (ie  jure 
the  manager,  secretary,  treasurer,  or  other  principal  officer  of  the 
company,  shall  be  conclusive  evidence  of  the  company  having 
duly  received  such  notice  (s.  6). 

Notice  of  assignment  should  be  given  at  once. — There  should  be  no 
delay  in  giving  notice  of  assignment  of  a  policy  of  insurance,  for 
in  the  absence  of  notice,  if  the  insurance  company  paid  the  policy- 
money  to  the  assignor  of  the  policy,  or  his  legal  personal  represent- 
ative, without  knowledge  of^  the  assignment,  they  could  not  be 
made  to  pay  the  money  again  (m),  and  the  assignment  might  be 
defeated  by  the  assignor  surrendering  the  policy  or  the  bonuses  to 
the  office  (n). 

Inquiry  aa  to  previous  notice. — No  person  should  take  an  assign- 
ment of  a  policy  of  insurance  without  first  inquiring  of  the  insur- 
ance company  whether  they  have  previously  received  notice  of  any 
assignment,  charge,  or  lien  thereupon.  When  the  notice 
has  been  given  to  the  proper  person,  he  cannot  ^disregard  [*  314] 
it  without  making  himself  liable  to  th'  assignee  (o).  If  he 
made,  even  though  unintentionally,  a  false  representation  to  an  in- 
tending assignee  as  to  previous  notice,  he  is  personally  liable  for 
the  loss  such  assignee  may  sustain  (jp). 

Assignment  under  Judicature  Act. — By  the  Judicature  Act,  1873,  s. 
25,  sub-s,  6,  any  absolute  assignment  in  writing^  not  purporting  to 
be  by  way  of  charge  only  of  any  legal  chose  in  action  of  which 
express  notice  in  writing  has  been  given  to  the  person  from  whom 
the  assignor  would  have  been  entitled  to  receive  the  same,  will  pass 
the  legal  right  and  power  to  give  a  good  discharge  for  the  same 

[l)  Newman  v.  Newman,  28  Ch.  D.  674,  54  L.  J.  Ch.  598,  52  L.  T.  422,  83  W. 
R.  505. 

(m)  Jones  v.  Gibbotis,  9  Ves.  407,  410. 

(n)  Forteacue  v.  Barnett,  8  M.  &.  R.  80,  2  L.  J.  N.  S.  Ch.  98.  Stocks  v.  Dob- 
ton,  17  .Tur.  228,  22  L.  J.  Ch.  884. 

(o)  Williama  v.  Thorp,  2  Sim.  267.  Baldwin  v.  Billingsley,  3  Verii.  589. 
Roberts  v.  Lloyd,  2  Beav.  876.    Andrews  v.  Bounfield,  10  Beav.  511. 

(p)  Lyde  v.  Barnard,  1  M.  &.  W.  101.  Swan  v.  Phillips,  S  N.  &.  P.  447. 
Burrows  v.  Lock,  10  Yes.  470.  Romshire  v.  Bolton,  L.  R.  8  Eq.  294,  88  L.  J. 
Ch.  694,  21  L.  T.  N.  S.  60,  17  W.  R.  086. 

255 


m 


*315 


THE   LAWS   OF   INSURAis'CE. 


V 


i 


without  the  concurrence  of  the  assignor.  This  provision  extends 
to  the  assignment  of  a  policy  of  assurance  which  is  a  chose  in  ac- 
tion iq).  It  is  in  one  respect  narrower  than  the  provision  contained 
in  the  Policies  of  Assurance  Act,  1867,  inasmucn  as  it  is  limited  to 
absolute  assignments  only,  whilst  the  Policies  of  Assurance  Act 
extends  to  assignments  which  are  absolute  as  well  as  to  assignments 
by  way  of  charge.  In  another  respect,  however,  the  provision  of 
the  Judicature  Act  is  wider  than  that  of  the  Policies  of  Assurance 
Act,  because  it  extends  to  "any  legal  chose  in  action,"  and  there- 
fore to  all  policies.  The  Policies  of  Assurance  Act,  on  the  other 
hand,  extends  only  to  policies  granted  by  a  corporation,  associa- 
tion, society,  or  company  (r). 

What  is  not  an  assignment  toithin  Policy  of  Assurance  Act,  1867. — An 
agreement  in  writing,  without  delivery  of  the  policy,  to  execute  on 
request  an  effectual  mortgage  of  a  life  policy  as  security  for  a  loan 
is  not  an  assignment  within  the  meaning  of  the  Policies  of  Assur- 
ance Act,  1867.    Consequently,  notice  to  the  assurance  company 

of  such  agreement  gave  no  priority  over  a  prior  equitable 
[*  315]  *mortgagee  who  had  given  no  notice,  but  who  liad  possession 

of  the  policy  (s).  It  lias  been  held  in  America  that  delivery 
of  the  policy  itself  is  necessary  (inter  alia)  to  constitute  an  assign- 
ment (<),  but  this  does  not  seem  to  be  the  rule  in  England  (u). 

Deposit  of  policies  with  a  creditor  as  security,  coupled  with  a  re- 
quest b^  letter  to  him  to  instruct  his  solicitor  to  prepare  the  neces- 
sary assignment,  is  not  an  equitable  assignment  within  the  Policies 
of  Assurance  Act,  1867  (30  &  31  Vict.  c.  144).  Consequuently,  writ- 
ten notice  to  the  company  will  not  in  such  a  case  be  enough  to  en- 
able the  depositee  to  give  the  insurer  an  effectual  discharge.  Jes- 
sel,  M.  R.,  said :  "  No  consideration  was  stated,  and  there  was  no 
agreement  to  assign.  There  had  been  a  deposit,  and  there  was  to 
be  an  assignment  only  if  the  plaintiff  (the  mortgagee)  thought  fit. 
For  some  reason  or  othei>',  he  did  not  choose  to  take  the  assignment, 
but  was  content  to  rely  on  the  deposit "  (a).  The  Court,  however, 
considering  that  sufficient  proof  nad  been  given  that  the  money 
was  really  due  to  the  mortgagee,  dispensed  with  the  executors  of 
the  mortgagor  (bv  16  &  16  Vict.  c.  86,b.44)  (y).  But  it  was  doubted 
by  the  Court  of  Appeal  whether  this  course  was  admissible  (z). 

Ex  parte  Ibbetson,  8  Ch.  D.  519,  80  L.  T.  N.  S.  1,  20  W.  &.  843. 
80  &  81  Vict.  c.  144,8.7. 

Spencer  v.  Clarke,  9  Ch.  D.  187,  47  L.  J.  Ch.  692,  27  W.  R.  183. 
See  Palmer  v  Merrill,  60  Mass.  (6  Cush.)  932.    But  see  Blisa  Life  Insiir- 
_     p,  511,  note  1. 

(m)  Kekewichy.  Manning,!  De  O.  M.  k  0.  176,  21  L.  J.  Ch.  577.  Ward  v. 
Audland,  8  Sim.  S71,  C  P.  Cooper,  446,  8  Beav.  201. 

(x)  CroaaUf/  v.  CtVy  of  Olaagow  Life,  4  Ch.  D.  421,  per  Jessel,  M.  R.  (1870), 
46  L.  J.  Ch.  66,  86  L.  T.  N.  S  286,  25  W.  R.  264. 
(if)  Ibid. 

{t)  See  per  Cotton  and  James,  L. JJm  in  Wehtter  v.  Britiah  Empire  Mutual, 
16  Ch.  D.  169,  40  L.  J.  Ch.  760.  48  L.  T.  N.  S.  220,  28  W.  R.  818.  But  nee  also 
Ourtiua  V.  Catedonian,  10  Ch.  D.  684, 61  L.  J.  Ch.  80,  80  W.  R.  126,  46  L.  T.  N. 
S.  662. 

266 


DISPOSITION  OF  LI  T.   POLICTES. 


*317 


■^.  !! 


Equitable  assignment. — A  covenant  to  effect  a  policy  by  way  of  se- 
curity id  not  enough  of  itself  to  vest  tlie  policy  in  the  cove- 
nantee (a) ;  it  does  not  seem  to  operate  as  an  ^equitable  as  [*  316] 
eignment  thereof,  or  to  give  him  a  lien  thereon. 

But  in  Ward  v.  Ward  (a),  a  covenant  by  a  defaulting  trustee  to 
effect  a  policy  on  his  own  life  was  held  to  entitle  the  cestuis  que 
trustent  to  the  proceeds  against  his  creditors. 

Bare  deposit  of  policy. — Mere  deposit  of  a  policy  with  a  creditor  as 
security,  notice  whereof  was  given  to  the  insurers  afterthe  death  of 
the  assured,  is  not  sufficient  to  entitle  the  creditor  to  demand  pay- 
ment from  the  insurance  company  without  the  concurrence  of  the 
debtor's  legal  personal  representative. 

Inierest  on  sum  assured. — And  if  the  creditor  makes  good  his  claim, 
the  insurers  will  not  be  liable  to  pay  interest  from  the  due  date 
v.bere  the  delay  is  owing  to  the  creditor's  neglect  to  clothe  himself 
with  the  legal  title  to  the  money  (6). 

Position  of  assignee  no  better  than  that  of  his  assignor. — The  assignee 
of  a  policy  will  not  be  in  any  better  position  than  the  person  who 
effected  and  assigned  it  to  him  (c).  Thus  B.,  at  the  instance  of  the 
agent  of  the  British  Equitable  Insurance  Company,  proposed  to  in- 
sure liis  life,  answered  the  questions  as  to  his  health  satisfactorily, 
and  mentioned  D.  as  Ills  last  medical  attendant,  and,  the  medical 
officer  of  the  company  reporting  favourably,  the  proposal  was  ac- 
cepted, and  a  letter  written  giving  notice  that  the  office  would  not 
be  liable  for  any  risk  in  consequence  of  a  variation  in  health  be- 
tween the  acceptance  of  the  proposal  and  the  actual  receipt  of  the 
first  premium.  B.,  becoming  suddenly  stout,  was  alarmed, 
and  consulted  W.,  a  physician,  *who  told  him  he  was  in  [*  317] 
danger,  and  wrote  to  D.  to  that  effect.  P.  taking  a  more  fav- 
orable view,  B.  then  paid  the  first  premiii  »/> ,  and  never  communicated 
to  the  office  his  constiltation  witn  W. ;  and  with  the  receipt  for  such 
premium  was  a  letter  exprepsing  that  if  any  alteration  in  health 
had  occurred  the  policy  would  be  void.  B.  assigned  the  policy  as 
security  for  a  debt  to  the  V.  of  N.  Railway  Co.,  represented  subse- 
quently by  the  York  Co.,  and  died  suddenly  of  disease  of  the  heart, 
and  a  jury  returned  that  verdict.  An  action  was  brought  on  the 
policy  in  the  name  of  the  widow:  and  it  was  held  that  the  non-com- 
munication by  B.  to  the  office  of  the  fact  of  his  consulting  W.,  al- 
tiiough  he  was  not  bound  to  say  what  W.  told  him,  vitiated  the 

(a)  Lees  v.  Whitelu.  2  Eq.  143,  86  L.  J.  Ch.  412,  14  L.  T.  N,  S.472,  14  W.  R. 
C34.    See,  however,  Ex  parte,  Caldwell,  20  W.  R.  863,  13  Eq.  188. 

(a)  18  Jur.  fi39. 

(b)  Webster  v.  lintish  Empire  Mutual,  15  Ch.  D.  169,  C  A.  (1880),  ubi  supra, 

'  {c)  Dormay  v.  liorrodaile,  10  Beav.  335,  16  L.  J.  Ch.  337.  British  Equitable 
V.  Great  Western  JtailtPa;/,  20  L.  T.  N.  S.  422,  88  L.  J.  Ch.  314,  17  VV.  R.  43, 
5>  r.  Anderson  v  Fitzr/erald,  4  H.  L  C.  484,  17  Jur. 095,  and  Scottish  Widows^ 
Fund  V.  Buist,  8  C.  S.  C.  (4th  series)  1078,  5  Ao  04  (H.  L. )  Policies  of  As,'  r- 
ance  Act,  1867,  s.  2.  Mangles  v.  Dixon,  3  H.  L.  C.  702  (1862).  l*urdew  v.  Jack- 
$on,  1  Rubs.  1 


17  PORTER  ON  INSURANCE. 


257 


*318 


THE  LAWS  OF  INSURANCE. 


policy,  and  that  the  defendants  were  in  no  better  position  than 
B.  (c/j. 

The  assignee  is  liable  to  all  the  defences  which  the  insurers  would 
be  ( ntitled  to  raise  against  the  assignor;  for  if  the  policy  be  affected 
by  any  vice  in  regard  to  the  assignor,  it  is  also  similarly  affected  as 
regards  the  assignee.  Policy  effected  by  fraud,  insurer  can  recover  monev 
paid. — So  if  the  assignor  have  affected  the  policy  by  fraud  practiced 
against  the  insurer,  and  subsequently  assigned,  and  the  assiirnee  be 
at  the  time  ignorant  of  the  fraud,  and  the  insurer  pays  the  assignee 
both  being  in  equal  ignorance  of  the  fraud,  the  insurer  may  recover 
from  the  assignee  the  money  paid  under  such  mistake  (e). 

Duty  of  insurer  knowing  assignee  is  deceived. — But  if  the  notice  of  as- 
signment given  to  the  insurer  discloses  on  the  face  of  it  that  which 
induces  the  belief  that  the  assignee  has  been  deceived  in  accepting 
the  assignment,  the  insurer  is  bound  to  inform  the  as^signee  of  the 
real  circumstances;  and,  if  he  does  not,  he  will  be  estopped  from 
taking  advantage  of  the  equities  existing  as  between  the  assignor 

and  himself  (/). 
[*  318]  ^Aggravation  of  illness  between  acceptance  of  life  and  payment 
of  premium.  Bond  fide  purchaser. — When  the  health  of  the 
life  grew  worse  between  the  acceptance  of  the  risk  and  payment  of 
the  premium,  but  the  aggravation  of  the  illness  was  not  disclosed  to 
the  msurers,  the  policy  was  held  vitiated,  and  bond  fide  purchasers 
for  value  (/)  without  notice  were  held  to  have  no  title  to  recover 
thereon  (</). 

Receipts  of  premiums  by  company  after  knowledge  of  invalidity  of  as- 
signed policy. — If  after  a  policy  has  been  assigned  the  insurance  com- 
pany become  aware  of  oojections  to  its  validity  so  clear  and  con- 
clusive that  the  mere  statement  of  them  is  enough,  there  may  be  a 
duty  of  communication  to  those  whom  the  company  know  to  be 
interested  in  the  policy.  It  would  not  be  consistent  with  good  faith 
that  they  should  in  such  circumstances  go  on  receiving  the  pre- 
miums on  a  policy  that  they  intended  to  challenge  in  the  end  (h). 

In  certain  companies  (mutual)  the  assignee  of  a  policy,  by  pay- 
ment of  premium,  is  held  to  have  contracted  to  become  a  member 
of  the  company,  and  is  liable  to  be  entered  on  the  register  as  a  con- 
tributory; out  if  the  directors  refuse  to  register  the  assignee  as  a 


{d)  British  Equitable  v.  O.  W,  R.  Co.,  supra. 

(c)  Ltifevre  v.  Doyle,  1  L.  J.  N.  S.  K.  B.  1!)9,  8  B.  &  Ad.  877. 

(/)  Mangles  v.  Dixon,  3  H.  L  C.  702. 

(/)  For  precautions  to  bo  observed  by  purchoser  or  mortgage  of  life  policioa, 
Bee  2  Dav.  Prec.  Conv.  pt.  1,  p.  054  note. 

(.7)  Jirituh  Equitable  v.  Great  Western  Railway  (1809),  38  L.  J.  Ch.  814,  17 
W.'ll.  801,  20  L.  T.  N.  S.  422.     Policies  of  Assurance  Act,  1807,  explained  oanot 

S'ving  the  asssii.',n  a  better  title,  but  only  aa  dispensing  with  administration  where 
e  assign  had  a  complete  title. 

(A)  Scottish  Equitable  v.  Buist,  4  C.  S.  C  (4th  series)  1081-82,  per  Lord 
President. 

2."8 


DISPOSITION   OF   LIFE   rOLICIES. 


320 


member  of  the  company,  the  Court  will  in  certain  cases  hold  him 
not  to  have  become  a  contributory  (t). 

Amgnment  before  winding  up. — On  the  other  hand,  assignment  be- 
fore winding  up  of  such  a  compjiny  relieves  the  assignor  {k). 

Payment  into  court  by  company  under  Trustee  Relief  Act  — The  Trustee 
Belief  Act,  until  extended  by  the  6th  sub-s.  of  s.  25  of  the  Judica- 
ture Act,  1873,  did  not  enable  an  insurance  company,  hav- 
ing notice  of  *conflicting  claims,  to  pay  policy-moneys  into  [*  819] 
court,  unless  the  moneys  were  the  subject  of  a  trust  (/); 
but,  inasmuch  as,  by  the  Policies  of  Assurance  Act,  1867  (m),  an 
unsatisfied  mortgagee  of  a  policy  might  sue  the  insurance  office  in 
his  own  name  on  his  assignment,  the  insurance  office  would  be 
justified  in  requiring  evidence  that  an  assignment  by  way  of  mort- 
gage of  which  they  had  notice  was  satisfied  before  they  paid  over 
the  money  to  a  subsequent  assignee  of  the  policy  (n). 

Validity  of  assignee's  claim  not  effected  by  length  of  time  between  no- 
tice of  assignment  and  death  of  assured. — It  does  not  matter  if  the 
last  assignment  of  which  notice  has  been  given  to  the  insurer  is 
over  twenty  years  old,  for  no  demand  can  be  made  under  it  until 
the  event  happens  in  which  the  policy-money  is  to  become  due. 
In  Haycock's  Policy  twenty-four  years  had  elapsed  between  the  as- 
signment by  way  of  mortgage  and  the  death  of  the  assured.  The 
latter  had  subsequently  to  the  mortgage  assigned  the  policy  to  a 
third  person,  and  he  to  the  petitioners  in  that  case.  But  absence 
of  claim  on  the  part  of  the  mortgagee  was  not  held  to  be  any  evi- 
dence that  the  claim  had  been  satisfied,  and  no  suggestion  was 
made  that  it  was  barred.  And  the  policy-monevs  were  only  paid 
out  of  court  on  the  personal  representative  of  tne  mortgagee  dis- 
claiming any  interest  therein. 

Specific  performance  of  contract  to  assign.  Free  from  incumbrances. — 
A  contract  to  assign  a  life  policy  may  be  ordered  to  be  specifically 
performed  (o).  And  undtir  such  a  contract,  unless  otherwise  agreed, 
the  assignment  must  be  free  of  incumbrances.  So  if  a  contract  is 
made  to  assign  a  policy,  and  the  assignor  had  (unknown  to  the 
would-be  assignee)  agreed  that  one-third  of  the  premiums 
should  be  a  charge  on  the  policy  payable  at  his  death,  *the  [*  320] 
burden  of  such  charge  must  be  satisfied  by  the  assignor  and 
not  transferred  to  the  assignee  (p).    Such  contract  passes  all  the 

(t)  Ex  parte  Saunders  (1882),  20  Ch.  D.  403,  51  L.  J.  Ch.  579,  47  L.  T.  N.  S" 
112. 

(k)  Ex  parte  Brown  (1881),  18  Ch.  D.  039,  50  L.J.  Ch.  714, 45  L.  T.  N.  S.  269,' 
30  W.  R.  80. 

(I)  Matthew  v.  Northern,  tfcc,  Co.,  9  Ch.  D.  80,  88  L.  T.  N.  S.  408,  47  L.  J. 
Ch.  502. 

(m)  80  &  81  Vict,  c  144. 

(n)  Re  Haycock's  Policy,  1  Ch'.  D.  611,  45  L.  J.  Ch.  247,  24  W.  R.  201. 

(o)  Ashley  v.  Ashley,  8  Sim.  149.     Godsall  v.  Webb,  2  Keen  00. 

(p)  Oatayea  v.  Flather,  84  Beav.  887,  per  Romilly,  M.  R. 

250 


^321 


THE   LAWS   OF   INSURANCE. 


}>enefits  attached  to  the  pohcies,  such  as  bonuses,  &c.  (7),  without 
further  words. 

Bankniptcy  of  assured.  Payiiient  of  premiums  by  assignee. — A  policy 
effected  on  own  life  at  an  annual  pn-raium,  on  bankruptcy  of  the 
assured  passes  to  his  trustee,  Jiowever  small  be  its  appnrent  value 
jit  such  date,  and  even  if  there  are  considerable  arrears  of  prennom 
due  thereon.  If  he  disclaim,  the  grantee  can  do  what  he  likes 
about  it  (r).  If  the  assured,  instead  of  delivering  up  the  poliw 
as  part  of  his  effects,  secretly  assign  it  to  another  person,  who  pavs 
the  arrears  of  premium,  and  upon  the  death  of  the  bankrupt  re- 
ceives the  sum  insured,  this  sum,  less  the  amount  of  arrears  so 
paid,  may  be  recovered  by  the  trustees  in  bankruptcy  as  money 
had  and  rtceived  to  their  use  (s). 

So  also  if  the  bankrupt  surrender  the  policy  and  procure  renewal 
to  one  creditor  in  consideration  of  his  accepting  the  compensation 
offered  (0-  •     .  . 

Covenant  to  keep  policy  on  foot. — If  a  policy  be  assigned  with  other 
property,  that  the  latter  assignment  should  be  avoided  will  not 
affect  the  assignee's  right  to  the  policy  (u). 

An  assignment  of  a  policy  of  assurance  by  the  cestui  qiie  vie  ought 
to  contain  an  express  covenant  by  him  that  he  will  not  do  anything 
to  vitiate  the  policy  or  prevent  the  assignee  from  receiving 
[*  321]  the  money.    A  *covenant  simply  to  do  all  things  necessary 
to  keep  the  policy  on  foot  is  not  broken  by  his  suicide,  al- 
though the  assignee  will  theroby  lose  the  benefit  of  the  policy  (x). 

Covenant  to  keep  policy  on  foot  whether  broken  by  going  abroad  — 
"  Such  a  covenant  may  practically  prevent  the  cestui  me  vie  from 
proceeding  to  any  British  colony,  or  even  from  leaving  Europe ;  for 
most  of  the  insurance  offices  make  residence  or  travelling  out  of 
Europe  vitiate  a  policy,  and  a  Court  of  Equil  v  will  restrain  a  man 
from  committing  a  breach  of  his  own  covenant.  Permission  to  re- 
side or  travel  abroad  in  healthy  latitudes  may, however,  usually  be 
obtained  from  the  office  on  payment  of  an  increased  premium ; 
and  a  covenant  to  pay  an  increased  premium,  which  may  become 
payable  in  the  event  of  the  assignee  allowing  the  cestui  que  vie  to 
go  abroad,  should  be  inserted  in  the  assignment.  Breach  of  condi- 
tions of  policy  by  covenantor.    Covenantor  to  keep  up  policy. — Of  course 

{q)  Courtney  v.  Ferrarx^  1  Sim.  137,  5  L.  J.  N.  S.  Ch.  107.  Parkas  v,  J5o«, 
0  Sim.  888. 

(r)  Ro  Learmonth.H  W.  R.  628. 

(s)  Sthondler  v.  Waee,  1  Camp.  486.  See  We.it  v.  Seid,  2  Hare  256,  and 
Pennell  v.  Millar,  23  Beav.  172,  5  W.  R.  216,  29  L.  T.  05,  where  assignor  had 
covenanted  to  keep  np  policies  and  assign  had  paid  the  premiums.  See  also 
Burridgc  v.  Row,  1  Y.  &  C.  Ch  C  18',  583,  13  L.  J.  Ch.  173,  8  Jur.  299.  Cou- 
nedictd  Mutual  Life  v.  Jiurroughs,  84  Conn.  SO.!. 

(t)  Pfleger  v.  Browne,  28  Beav.  891,  per  Romilly,  M.  R. 

(m)  Poker  v.  Roberts,  7  Jur.  N.  S.  400,  9  W.  R.  605.  See  Pennell  v.  Millar, 
supra.     Bromlei/  v.  Smith,  26  Beav.  644. 

(«)  Borrodaile  v  Hunter,  6  M.  k  O.  639, 12  L.  J  C.  P.  226, 6  Scott  N.  R.  418, 7 
Jur.  443.    Dorviay  v.  BorrodaiUf  10  Beav.  836,  16  L.  J.  Ch.  337. 

260 


DISPOSITION   OF   LIKE   POLICIES. 


;_i22 


the  assignor  of  a  policy  has  notice  of  all  its  conditions,  and  will,  if 
h  avoid  the  policy  by  breaking  any  of  its  conditions,  be  re- 
sponsible under  the  ordinary  covenant  not  to  vitiate  the  policy ; 
but  where  one  covenanted  that  he  would  appear  at  any  insurance 
office  within  the  bills  of  mortality,  and  enable  the  covenantee  to 
insure  liis  life,  and  in  pursuance  of  his  covenant  appeared  at  an  of- 
fice which  subsequently  granted  to  the  covenantee  a  policy  contain- 
ing a  condition  that  the  covenantor  should  not  go  beyond  the  lim- 
its of  Europe,  it  was  held  that  the  covenantee  ought  to  have  given 
the  covenantor  notice  that  the  insurance  had  been  eflfected  on  those 
terms;  and  that,  not  having  done  so,  he  could  not  recover  damages 
for  theavoidance  of  the  policy  by  the  covenantor  quitting  Europe  (y). 
But  if  the  covenant  be  explicit  and  the  covenantor  have  notice  of 
the  terms  of  the  policy,  the  covenant  will  be  construed  strictly,  and 
the  covenantee  may  enter  up  a  judgment  and  issue  execu- 
tion against  the  covenantor  *«for  neglecting  to  keep  the  pol-  [*  322] 
icy  on  fool,  notwithstanding  he  may  himself  have  obtained 

its  renewal "  (z)- 

An  action  will  lie  for  breach  of  covenant  to  effect  and  settle  a 
policy,  and  the  damage  caused  by  the  breach  may  be  proved  for  (a). 

Non-assignable  life  insurances. — Insurances  under  the  Customs  An- 
nuity and  Benevolent  Fund  (56  Geo.  III.  c  Ixxiii.,  34<&35  Vict.  c. 
103  and  Rules  of  1872  thereunder)  are  not  part  of  the  assured's  es- 
tate. He  has  only  a  limited  power  of  appointment  over  the  funds 
secured  thereby.  On  making  certain  payments  during  his  life  he 
acquires  a  right  to  appoint  a  surii  of  money  on  his  death  either  for 
the  benefit  of  his  widow,  if  any,  or,  if  not,  of  his  relatives  and  nom- 
inees if  accepted  by  the  directors  (6). 

The  appointment  being  limited,  no  legacy  duty  is  payable 
thereon  (c),  but  succession  duty  is  payable  (d). 

If  no  nomination  is  approved  and  registered  during  life,  but  the 
assured  makes  a  bequest  of  such  policy,  the  legatee  cannot  take, 
and  the  assured's  children,  if  any  (his  wife  being  dead),  are  en- 
titled (6). 

But  irrevocable  assignment  of  a  certain  portion  of  the  sum  in«- 
Bured  is  permitted  under  certain  restrictions  by  the  said  Rules  (/). 

The  effect  of  mortgage  of  such  permitted  portion  would  be  a  dis- 
position j7ro  tanto;  and  his  mortgagee's  interest,  if  any,  would  be 

(y)  Vf/se  V.  Wak^ld,  6  M.  k  W.  442. 

(2)  Winfhorp  v.  Murray,  8  Ha.  214  (1852).  Davidson's  Precedents,  4th  ed. 
vol.  2,  p.  656. 

[a)  Arthur  v.  Wynne,  14  Ch.  D.  603,  49  L.  J.  Ch.  557,  43  L.  T.  N.  S.  46,  28 
W.  R.  972. 

\h)  Attorney-General  v.  Abdy,\  H.  &  C  206,  82  L.  J.  Ex.  9. 

(r)  Attorney-General  v.  Jioiiael,  Tilsley  on  Stamps  685  (2iid  ed.). 

(d)  Attorney- General  v.  Abdy,  supra.  Succession  Duty  Act  (10  &  17  Vict,  c. 
61),  8.  17. 

(e)  Tr.  PhiUips'  Insurance,  23  Ch.  D.  285,  52  L.  J.  Ch.  44,  48  L.  T.  N.  S.  81, 
81W.  R.  All 

(/)  McLean's  Trusts,  19  Eq.  274,  per  Jessel  M.  B.  (1874). 

261 


:     'Uilal 


*324 


THE  LAWS  OF  INSURANCE. 


subject  to  the  dispositions  of  the  assured's  will,  or  the  rules 
[*  323]  of  the  society.    The  ^assignees  or  mortgagees  of  such  a  pol- 
icy  will  not  be  liable  to  succession  duty  {g). 

The  assured  may  settle  his  share  of  the  benevolent,  funfl  to  trus- 
tees, for  the  benefit  of  his  daughter  on  her  marriage.  Such  settle- 
ment is  within  the  words  of  the  rule,  "for  the  benefit  of  the  child 
or  children."  No  admii^sion  of  the  trustees  or  the  husband  as  nomi- 
nees, nor  any  consent  of  the  directors  of  fund,  is  necessary  (h). 

Friendly  societies — Insurances  made  under  the  Friendly  Societies 
Acts  (38  &  39  Vict.  c.  60,  30  &  40  Vict.  c.  32)  are  not  assignable, 
and  we  believe  are  treated  by  the  Registrar  of  Friendly  Societies  as 
non-assignable.  The  (assured)  member  may,  however,  by  writing 
under  his  hand,  delivered  or  sent  to  the  society  at  its  registered  of- 
fice, nominate  any  person  as  the  recipient,  in  case  of  his  (the  mem- 
ber's) death,  of  any  sum  from  the  society  not  exceeding  £50.  But 
such  nomination  is  revocable  in  the  same  manner.  It  seems  only 
to  amount  to  a  power  of  revocable  appointment,  and  no  contract  not 
to  revoke  would  bind  the  society. 

This  power  of  nomination  is  confined  to  members  who  have  at 
tained  sixteen  years  of  age  (i). 

Insurances  on  children's  lives  under  ten. — When  assurances  are  made 
on  the  lives  of  children  under  the  Friendly  Societies  Act,  1875,  the 
only  people  who  can  receive  money  are  the  parents,  or  their  per- 
sonal representatives,  s.  28  (2). 

Insurances  effected  tluough  the  Post  Office  also  are  not  assign- 
able, but  a  power  of  nomination  is  given.  The  same  rule  applies 
to  the  Customs  Benevolent  Fund,  and,  it  would  seem,  to  various 

Indian  Civil  Service  Funds. 
[*  324]      *Post  Office  insurances, — Assignments  of  Post  Office  insur- 
ances or  annuities  are  subject  to  the  provisions  of  27  &  28 
Vict.  c.  43  B.  11,  and  the  Rules  made  under  the  Act  ( j  ). 

Assignment  of  void  policy. — The  assignee  cannot  recover  on  a  policy 
void  for  fraud  of  the  assignor,  or  for  misrepresentations  in  the  pro- 
posals (Jc). 

In  an  ordinary  life  policy  the  assignee  for  value  can  recover  by 
the  terms  thereof. 

Legal  means  lawful. — The  words  "  legal "  in  a  proviso  which  avoids 
the  policy,  "except  it  shall  have  been  legally  assigned,"  means  law- 
ful, not  legal,  as  opposed  to  equitable  (I). 

Authority  to  hold  amounts  to  assignment. — Authority  to  hold  the 
policy  for  any  bills  or  notes  cashea  for  the  grantee  has  also  been 


(g)  McLean's  Trusts,  supra     15  &  IG  Vict.  c.  61  (Succession  Duty  Act),  s.  17. 

(A)  Pocock'a  Policy,  G  Cli.  App.  447,  25  L.  T    N.  8.  233,  19  W.  R.  801. 

(/)  88  &  89  Vict,  c.  GO,  s.  15  (3). 

( i' )  80  &  81  Vict.  c.  144,  b.  8.  16  &  17  Vict.  c.  45 ;  27  &  28  Vict.  c.  43. 

(k)  British  Equitable  \.  Great  Western  liailwa}/,  19  L.  T.  N.  S.476,  perMalins, 
V.  C.  (1869),  affd.  20  L.  T.  N.  S.  423,  17  W.  R.  48,  88  L.  J.  Ch.  132,  814 

(/)  Dufaur  v.  Professional^  25  Beav.  599,  4  Jur.  N.  S.  841,  27  L.  J.  Ch.  817, 
83  L.  T.  '25 


262 


DISPOSITION  OF  LIFE   POLICIES. 


325 


held  to  be  an  assignment  witliin  tlie  terms  of  a  policy  containing 
the  following  words:  ''unless  it  shall  have  been  assigned  for  valu- 
able consideration  pix  months  before  death  "  (m). 

Insurers  can't  avoid  policy  and  claim  advawe. — The  insurers,  if  they 
make  advances  on  a  policy,  are  third  persons  for  that  purpose,  and 
cannot  avoid  the  policy  and  claim  the  debt  (n). 

Bankruptcy. — But  if  the  policy  pass  by  operation  of  law  to  a 
trustee  in  bankruptcy,  this  is  not  an  assignment  within  the  above 
exception. 

Void  assignment  as  security  for  antecedent  debt. — An  assignment  of 
a  policy  which  is  voluntary  and  void  under  13  Eliz.  c.  5, 
may  nevertheless  be  allowed  as  a  *charge  on  the  policy  to  [*  325] 
iheextent  of  an  antecedent  debt,  in  consideration  of  which 
it  was  assigned  (o). 

An  assignment  by  way  of  charge  with  a  trust  as  to  the  surplus 
in  favour  of  a  third  person  has  been  held  void  against  creditors  as 
to  such  trusts  (^). 

So  will  be  assignment  by  a  bankrupt  of  an  undisclosed  policy  (q). 

Assignment  by  felon. — But  a  felonious  taking  of  property  so  far 
raises  a  debt  as  to  support  the  assignment  of  a  policy  by  the  felon 
before  conviction  as  security  for  the  sum  taken  (r). 

Gift  of  policy. — Gift  of  a  policy  is  not  valid  against  creditors,  if 
the  settlor  was  at  the  time  insolvent  (s).  But  once  completely 
made,  it  is  not  revocable  by  the  donor  {t). 

To  constitute  such  a  gift  the  policy  may  simply  be  delivered  over 
with  appropriate  declarations  (m),  or  be  assigned  in  writing  (x),  or 
declared  to  be  held  by  the  donor  in  trust  for  the  donee  (y\  or  di- 
rected to  be  held  by  a  trustee  (2),  an  insurer  (a),  or  a  bailee  for  a 
particular  purpose. 

Expression  of  desire  to  settle  policy  may  amount  to  assignment. — Where 
a  man  had  made  a  settlement  on  his  first  marriage,  and,  being  a 
widower  and  desiring  to  marry  again,  wrote  to  one  of  the  trustees 

(m)  Jones  v.  Consolidated,  26  Beav.  266,  5  Jur.  N.  S.  214.  28  L.  J.  Ch.  66,  32 
L  T.  307.  Moore  v.  Woolsei/,  4  E.  &  B.  24a,  24  L.  J.  Q.  B.  40,  1  Jur.  N.  S.  468, 
24  L.  T.  156,  3  W.  R.  66,  3  C  L.  Rep.  207  White  v.  Bntish  Empire,  7  Eq  394, 
3S  L.  J.  Ch.  53,  17  W.  R  26,  li)  L.  T.  N.  S.  306. 

(tt)  Jackson  v.  Forster,  1  E.  &  E.  468,  5  Jur.  N.  S.  1247,  29  L.  J.  Q.  B.  8,  33 
L.  T.  290,  7  W.  R.  578. 

(0)  Stokoe  V.  Cowan,  30  L.  J.  Ch.  882,  29  Beav.  037,  4  L.  T.  N.  S.  695,  7  Jur. 
N.  S.  901,  9  W.  R  801. 

(p)  Magawley's  Trusts,  5  De  G.  &  Sm.  1,  15  Jur.  1005. 

(q)  SchoiuUer  v.  Ware,  1  Camp.  487.    Re  .Smith,  12  W.  R.  534. 

(r)  Chotcne  v.  Baylis,  31  Beav.  351,  11  W.  R.  5,  6  L.  T.  N.  S.  739,  31  L.  J. 
Ch.  757,  8  Jur.  N.  S.  1028. 

{s)  Magawley's  Trust,  6  De  G.  &  S.  1,  15  Jur.  1005. 

h)  Rummens  v.  Hare,  1  Ex.  D.  169,  34  L  T.  N.  8.  407,  24  W.  R.  885. 

(m)  Barton  v.  Gainer,  8  H.  &  N.  387,  27  L.  J.  Ex.  390. 

(«)  liotces  V.  Prudential  Assurance,  49  L.  T.  N.  S.  138. 

(y)  Sewell  v.  King,  14  Ch.  D.  179,  28  W.  R  344 

h)  Magawley^s  Irust,  supra,  per  Parker,  V.  C 

(a)  Such  are  policies  uudier  Married  Women's  Property  Acts. 

263 


•'  il  I 


327 


THE  LAWS  OF  INSURANCE. 


m 


it 


^ 


tliereof  saying  that  ho  desired  to  make  a  settlement  (of  six  policies 
oil  hid  own  life)  on  the  children  by  the  first  marriage,  and  handed 

three  to  one  trustee,  and  told  him  that  the  others  were  in  a 
[^'  326]  bank  as  collateral  security  for  a  loan,  but  *that  he  would 

pay  off  the  said  loan,  but  made  no  legal  assignment,  and  no 
notice  was  given  to  the  insurers  or  the  other  trustee.  Hall,  V  C 
ht'Ul:—  ■    ■' 

(1)  That  the  evidence  showed  a  complete  assignment. 

(2)  That  the  person  whose  duty  it  was  to  give  notice  to  the  in- 
surers was  the  trustee,  and  not  the  settlor. 

(3)  That  such  notice  only  gave  a  legal  title  to  sue  in  the  assign's 
own  name,  and  nothing  more  (6). 

Policy  setUement  on  same  footing  as  other  property. — Where  the  policy 
is  f?o  framed  as  to  be  part  of  his  own  estate,  the  grantee  can  settle 
it  in  the  same  way  in  which  he  could  settle  any  other  personal 
property,  and  subject  to  the  same  liability  to  havo  his  settlement 
set  aside  by  creditors  as  attends  on  any  voluntary  settlement  (c). 

Non-performance  by  the  husband  ot  his  covenant  to  eflfect  and 
settle  a  policy  will  not  debar  him  from  insisting  on  performance 
by  his  wife's  father  of  his  covenant  to  settle  property  on  similar 
trusts  (d). 

Names  of  persons  interested  must  appear  m  policy — both  the  names  of 
trustee  and  c.  </.  t. — The  statute  prohibits  the  making  an  insurance 
on  the  life  of  any  person  or  any  other  event  whereon  the  person 
for  whose  benefit  or  on  whose  account  the  policy  shall  be  made 
shall  have  no  interest,  and  renders  void  every  policy  made  contrary 
to  the  Act.  It  also  renders  it  imj)erative  to  insert  in  the  policy  the 
names  of  the  persons  interested  therein  («).  But  the  statute 
[*  327]  *does  not  prohibit  a  policy  being  granted  to  one  person  in 
trust  for  another  where  the  names  of  both  persons  appear 
on  the  face  of  the  policy  (/). 

Trustee  enabling  settler  to  dispose  of  policy  is  liable. — When  by  a  mar- 
riage settlement  the  husband  assigned  a  life  policy  to  two  trustees 
and  covenanted  to  pay  the  premiums,  one  of  the  trustees  having 
disclaimed,  the  other  enabled  the  husband  to  dispose  of  the  policy 
and  a  bonus  thereon,  and  it  was  held  that  he  was  liable  to  pay  to 
the  trust  estate  the  money  actually  received  for  the  policy  (g). 

(b)  Smell  V.  King,  14  Ch.  D.  179,  per  Hall,  V.  C,  28  W.  R.  844,  following 
Fortesaie  v.  Barnett.  3  My.  &  K  36,  2  L.  J.  N.  S  Ch.  {>8 ;  Pearson  v.  Amicable, 
27  Beav.  229,  7  W.  R.  G2i) ;  Kekewich  v.  Manning,  1  D.  M.  &  G.  176,  21  L.  J. 
Ch.  577.    See  Milroy  v.  Lord,  4  D.  F.  &  J.  264. 

(c)  See  Holt  v.  Ecerall,  2  Ch.  D.  266.  45  L.  J.  Ch.  433,  34  L.  T.  N.  S.  599,  24 
W.  R.  471,  as  to  mode  of  turning  a  policy  on  own  life  into  one  in  favour  of  wife 
and  children. 

{(i)  Jeston  v.  Key,  6  Ch.  App.  610. 

(e)  Hodnon  v.  Observer  Society,  8  El  &  Bl.  40,  26  L.  J.  Q.  B.  803,  29  L.  T. 
278,  6  W.  R.  712,  8  Jur.  N.  S.  1125.  ShUling  v.  Accidental,  2  H.  &  N.  42,  1  F. 
&  F.  116,  26  L  J.  Ex.  266,  27  do.  16,  6  W  R.  567. 

(/)  Collett  V.  Morrison,  9  Hare  162,  21  L.  J.  Ch.  878. 

(g)  Kingdom  v.  Caatleman,  46  L.  J.  Ch.  448. 

264 


DISPOSITION   OF  LIFE   POLICIES. 


328 


Tnuitees  may  sell  where  settler  can't  keep  up  policy. — Where  a  policy 
has  been  settled  and  the  settlor  is  unable  to  perform  his  covenant 
to  keep  up  the  premiums,  the  Court  will  authorize  the  trustees  to 
sell  or  surrender  the  policy  (h). 

When  trustee  must  keep  policy  up. — If  an  annuity  or  life  policy  is 
in  settlement,  it  is  the  implied  duty  of  the  trustee  to  keep  it  up.  It 
is  otherwise,  Jiowever,  if  he  does  not  insure,  but  simply  pays  the 
premiums  as  an  agent  (t).  If  a  trustee  who  insures  does  not  keep 
the  policy  up,  he  is  liable  to  his  cestui  que  trust  if  he  had  funds  in 
hand  to  pay  the  premiums  (k),  but  it  is  otherwise  if  he  had  not 
funds  and  could  not  get  any  (I).  If  the  trustee  advance  funds  he 
has  a  lien  on  the  policy  for  the  amount  of  his  advances  (m). 

Trusts  of  a  policy. — The  trusts  declared  of  a  policy  are  similar  in 
nature  to  those  declared  of  other  securities,  and  are  construed  in  the 
same  way.  While  they  divest  the  settlor  of  his  interest,  a  resulting 
trust  or  apt  terms  in  the  deed  may  bring  it  back.  Thus  a  trust  for 
A.,  but  if  he  predeceased  the  settlor  then  for  B.,  unless  the 
settlor  should  *sell  on  A.'s  decease,  has  been  held  to  enable  [*  328] 
the  settlor  to  dispose  of  the  policy  as  he  liked  on  A.'s  death 
by  charge  or  sale  (n). 

Again,  trust  of  a  policy  cannot  be  declared  by  reference  in  the 
would-be  settlor's  will  to  a  letter,  though  he  could  give  the  policy 
away  on  his  death-bed  (o). 

If  there  are  no  funds  to  keep  up  a  trust  policy,  the  Court  will 
order  it  to  be  sold  (p)  or  surrendered  (q). 

Policy  in  names  of  trustees. — There  is  an  advantage  in  taking  a 
trust  policy  in  the  names  of  the  trustees,  as  it  diminishes  the  risk 
of  forfeiture,  and  avoids  the  necessity  of  an  assignment,  and  of  giv- 
ing notice  to  the  office. 

Assignment  of  principal  money  will  pass  bonus. — Trusts  of  a  policy, 
whether  efTctea  in  the  names  of  the  trustees  or  assigned  to  them, 
will  in  general  comprise  bonuses,  as  will  as  the  original  sum  as- 
sured. Hence  if  it  be  desired^  with  reference  to  the  practice  of  the 
office,  or  the  terms  of  the  policy,  that  there  should  be  an  option 
of  having  a  bonus  applied  in  diminution  of  the  premium,  power 
for  this  purpose  should  be  specially  given  (r).    Where  a  husband 

(h)  Hill  V.  Trenen/,  23  Beav.  16      Beresford  v.  Beresford,  23  Beav.  292. 

(i)  Barmy  v.  Croft,  9  Ir.  Ch.  19.  , 

\k)  Marriott  v.  Kinnersley,  Tamlyn  470. 

(Ij  Hobday  v.  Peters,  28  Beav,  C03. 

(m)  Clarli  V.  Holland,  19  Beav.  262,  273,  2  W.  R.  402, 18  Jur.  1007.  Johnson 
V.  Sicire,  3  Giff.  194.  Todd  v.  Moorhouse,  L.  R.  19  Eq.  69,  23  W.  R.  155,  32  L. 
T  N   S  8 

(n)  Johnson  v.  Ball  (1862),  16  Jur.  638. 

(o)  Peddler  v.  Mozelet/,,  81  Beav.  159,  7  L.  T.  N.  S.  205. 

ip)  Hill  V.  Trenery,  (1858),  23  Beav.  16. 

f  (?)  Beresford  v.  Beresford,  23  Beav.  292. 

(r)  Purkes  v.  Bott,  9  Sim.  888.  Lackersteen  v.  iMckersteen,  6  Jur.  N.  S.  1111, 
80  L.  J.  Ch.  5.  Courtney  v.  Ferrers,  1  Sim.  137,  5  L.  J.  0  S.  Ch.  107.  GilUy 
v.  Burley,  22  Beav.  619.    Davidson's  Precedents,  vol  8,  807. 

265 


'      K 


i 


il  -I 


*330 


THE  LAWS  OF  INSURANCE. 


covennntod  to  effect  and  settle  an  insurance  policy,  and  effected  a 
participating  policy,  it  was  held  that  he  was  entitled,  at  his  option 
to  have  bonuses  paid  to  him,  or  applied  in  reduction  of  premiums 
(s).  And  on  a  bequest  of  a  jjolicy  on  the  life  of  a  person  other 
than  the  testator,  the  executors  were  held  entitled  to  take  the  bo- 
nuses and  apply  them  in  reduction  of  premiums  (0- 

Wife's  consent  to  husband's  assignment. — In"  America  it  has  been 

held  that" a  lite  policy  by  a  husband  on  his  own  life  for  the 

[*  329]  benefit  of  his  wife  is  ^assignable  during  his  life,  with  her 

consent,  as  collateral  security  for  his  debts,  where  no  statute 

directly  prohibits  it,  and  that  she  is  debarred  by  such  consent  from 

recovering  the  proceeds  of  the  policy  («)  ('). 

In  England  probably  the  same  would  be  the  case  on  such  a  pol- 
icy, since  the  wife  being  alone  named  would  be  sole  and  absolute 
beneficiary  under  the  policy  if  she  survived  her  husband  (t). 

If  a  wife  takes  out  a  policy  on  her  husband's  life  to  her  separate 
use,  but  if  she  die  before  the  husband,  then  for  her  children,  the 
husband  cannot  deal  with  the  policy  (u). 

In  Scotland,  under  the  law  as  to  communio  bonorum  between 
spouses,  it  seems  that  a  husband  who  effects  a  policy  on  his  wife's 
life  for  her  benefit  can  charge  the  policy  during  his  lifetime  (x). 

Married  woman's  'power  to  insure. — By  the  Married  Women's 
Property  Act,  1870  (2/),it  is  provided  that  "  A  married  woman  may 
effect  a  policy  of  assurance  upon  her  own  life,  or  the  life  of  her 
husband,  for  her  separate  use ;  and  the  same  and  all  benefit  thereof, 
if  expressed  on  the  face  of  it  to  be  so  effected,  shall  enure  accorci- 
ingly,  and  the  contract  in  such  policy  shall  be  as  valid  as  if  made 
with  an  unmarried  woman." 

Husband's  policy  for  benefit  of  wife. — "  A  policy  of  assurance  effected 
by  any  married  man  on  his  own  life^  and  expressed  upon  the  face 
of  it  to  be  for  the  benefit  of  his  wife,  or  of  his  wife  and  children,  or 
any  of  them<  shall  enure  and  be  deemed  a  trust  for  the  benefit  of 
his  wife,  for  her  separate  use,  and  of  his  children,  or  any  of  them, 
according  to  the  interest  so  expressed,  and  shall  not,  so  long 
[*  330]  as  any  object  of  *the  trust  remains,  be  subject  to  the  con- 
trol of  the  husband  or  his  creditors,  or  form  part  of  his  es- 
tate. When  the  sum  secured  by  the  policy  becomes  payable,  or  at 
any  time  previouslj^,  a  trustee  thereof  may  be  appointed  by  the 
Court  of  Chancery  in  England  or  Ireland,  according  as  the  policy 


(s)  Hughes  v.  Searle,  W.  N.  1885,  p.  79. 

(t)  Re  Edmed,  W.  N.  1885,  p.  15?. 

is)  Charter  Oak  Life  v.  Ih-ant,  4  Am.  Rep.  323,  2  Story  Eq.  Jur.  b.  1413. 

it)  83  &  84  Vict,  c  93,  s.  10 ;  and  see  Kertcin  v.  Howard,  24  Wise  108. 

(m)  Chapin  v.  Fellows,  36  Conn.  132,  4  Am.  Rep.  49, 

(a?)  Thomson's  Trustees  v.  Thomson,  6  C.  S.  C.  (4tb  series)  1227. 

(y)  83  &  84  Vict,  c  93,  s.  10. 

*  If  a  man  insures  his  life  for  his  wife's  benefit,  his  surrender  of  the  policy 
without  her  consent  is  inoperative  as  to  her.  Manhattan  Life  Ins.  Co,  v.  Smith, 
44  Ohio  St.  166. 


DISPOSITION   OF  LIFE   POLICIES. 


*331 


of  insurance  was  effected  in  England  or  in  Ireland,  or  in  England 
by  the  judge  cf  llie  county  court  of  the  district,  or  in  Ireland  by 
the  chairman  of  the  civil  bill  court  of  the  division  of  the  county  in 
which  the  insurance  office  is  situated,  and  the  receipt  of  such  trus- 
tee shall  be  a  good  discharge  to  the  office.  Intent  to  defraud  creditors. 
—If  it  shall  be  proved  that  the  policy  was  effected  and  premiums 
paid  by  the  husband  with  intent  to  defraud  liis  creditr  .s,  they  shall 
be  entitled  to  receive  out  of  the  sum  secured  an  amount  equal  to 
the  premiums  so  paid."  Bankruptcy  of  husband. — This  section  con- 
trols s.  91  of  the  Bankruptcy  Act,  1869,  and  preserves  the  policy  to 
the  wife,  notwithstanding  the  bankruptcy  of  the  husband  (2). 

Married  Women^s  Property  Act,  1882. — Although  the  Married  Wo- 
men's Property  Act,  1870,  and  the  Married  Women's  Property  Act 
(1870)  Amendment  Act,  1874,  are  repealed  by  the  Married  Women's 
Property  Act,  1882,  s.  22,  this  section  provides  that  such  repeal 
shall  not  effect  any  act  done  or  right  acquired  wliile  either  of  such 
Acts  was  in  force,  or  any  right  or  liability  of  any  husband  or  wife 
married  before  the  commencement  of  this  Act  to  sue  or  to  be  sued 
under  the  provisions  of  the  said  repealed  Acts,  or  either  of  them, 
for  or  in  respect  of  any  debt,  contract,  wrong,  or  other  matter  or 
thing  whatever,  for  or  in  respect  of  which  any  such  right  or  liabil- 
ity shall  have  accrued  to  or  against  such  husband  or  wife  before 
the  commencement  of  this  Act. 

Construction  of  s.  10  Married  Women^s  Property  Act,  1870. — In  Re 
Adam's  Policy  IHists  (a)  a  husband  effected  a  policy  for  the 
benefit  of  his  wife  and  children  under  *the  Married  Women's  [*  331] 
Property  Act,  1870,  and  died  insolvent.  His  wife  and  one 
child  of  the  marriage  predeceased  him.  Upon  a  petition  by  his 
surviving  children  under  the  10th  section  of  the  Act  for  the  ap- 
pointment of  a  trustee  of  the  policy -money  for  a  declaration  as  to 
the  rights  of  the  petitioners,  the  Court  held  that  it  had  under  the 
10th  section  no  jurisdiction  to  do  more  than  make  the  order  ap- 
pointing a  trustee ;  but  since  under  the  policy  there  was  a  trust 
either  for  his  wife  for  life  with  remainder  to  the  children,  or  in  the 
alternative  for  the  wife  and  children  as  joint-tenants,  the  order  was 
directed  to  be  prefaced  with  an  expression  of  opinion  by  the  Court 
that  the  wife  took  no  interest,  and  that  the  surviving  children  took 
as  joint  tenants ;  and  it  was  held  by  Chitty,  J.,  that  a  policy  effected 
by  a  husband  under  s.  10  of  the  Married  Women's  Property  Act, 
1870,  "  for  the  benefit  of  his  wife  and  children,"  should  be  read  in 
conjunction  with  that  section,  and  should  by  virtue  of  the  words 
"separate  use"  in  the  section  be  construed  as  giving  the  wife  a  life 
interest  only,  with  remainder  to  the  children  (a). 

Where  there  was  a  surrender  of  policy  prior  to  Married   Women^s 


(z)  Holt  V.  Everall,  2  Ch.  D.  ^60,  45  L.  J.  Ch.  433,  34  L.  T.  N.  S.  599,  24  V. 
R.  471. 
(0)  23  Ch.  D.  5?5,  52  L.  J.  Ch.  642,  48  L.  T.  N.  S.  727,  81  W.  R.  810. 
(a)  But  see  Seton  v.  Satterthwaite,  post,  p.  834. 

267 


*332 


THE  LAWS  OF  INSURANCE. 


Property  Act  for  one  subseqmnt  to  the  Act,  the  insurance  was  held  suh'i- 
quent. — In  Holt  v.  Everall  (6),  a  husband,  who  before  tlie  passing  of 
the  Married  Women's  Property  Act,  1870,  had  insured  liia  life  j.tid 
liad  paid  one  premium  on  the  insurance,  after  the  passing  of  the 
Act  gave  up  the  policy  and  received  instead  a  policy  at  the  same 
premium  for  a  sum  payable  to  the  separate  use  of  his  wife  if  she 
survived  him,  and  to  him  if  he  survived  her.  He  was  at  the  time 
in  embarrassed  circumstances,  and  soon  after  came  under  liquida- 
tion by  arrangement,  and  then  died.  His  wife  had  separate  estate 
subject  to  a  restraint  on  anticipation,  and  the  Court  held  that  the 
insurance  must  be  taken  as  having  been  effected  after  the  passing 
of  the  Married  Women's  Property  Act,  and  that,  whether  tlie  sub- 
sequent premiums  were  paid  by  *,he  husband  out  of  his  own 
[*  332]  money  or  out  of  *the  income  of  the  wife's  separate  estate 
the  money  payable  on  the  insurance  did  not  go  to  tha  trus- 
tee under  the  bankruptcy,  but  went  to  the  widow  by  virtue  of  the 
Married  Women's  Property  Act.  It  was  further  held  on  the  evi- 
dence that  the  premiums  were  paid  out  of  the  wife's  separate  estate, 
and  that  therefore  the  trustee  in  bankruptcy  would  not  receive  out 
of  the  i  isurance-money  the  amount  of  the  premiums. 

Power  of  wife  to  insure  under  Married  Womcn''s  Property  Act,  1882.— 
The  Married  Women's  Prooerty  Act,  1882  (45  &  46  Vict.  c.  75)  s. 
11,  provides  that  "a  married  woman  may  by  virtue  of  the  power 
of  making  contracts  hereinbefore  contained,  eflFect  a  policy  upon 
her  own  life  or  the  life  of  her  husband  for  her  separate  use,  and  the 
same  and  all  benefit  thereof  shall  enure  accordingly.  Policy  by 
husband  for  wife  and  children. — A  policy  of  insurance  eflFected  by  any 
man  on  his  own  life,  and  expressed  to  be  for  the  benefit  of  his  wile 
or  of  his  children,  or  of  his  wife  and  children  or  any  of  them,  or 
by  any  woman  on  her  own  life,  expressed  to  be  for  the  benefit  of 
her  husband  or  of  her  <'.hildren,  or  of  her  husband  or  children  or 
any  of  them,  shall  create  a  trust  in  favour  of  the  objects  therein 
named,  and  the  moneys  payable  under  any  such  policv  shall  not, 
so  long  as  any  object  of  the  trusts  remain  unperformed,  f  «rm  part 
of  the  estate  of  the  insured  or  be  subject  to  his  or  her  debts.  In- 
tent to  defraud  creditors. — Provided  that  if  it  shall  be  proved  that 
the  policy  was  effected  and  the  premiums  paid  with  intent  to  de- 
fraud the  creditors  of  the  assured,  they  shall  be  entitled  to  receive 
out  of  the  moneys  payable  unler  the  policy  a  sum  equal  to  the 
premiums  so  paid.  Appointment  of  trustee  of  policy-ynoney. — The  in- 
sured may  by  the  policy  or  by  any  memorandum  under  hie  or  her 
hand  appoint  a  trustee  or  trustees  of  the  moneys  payable  under  the 
policy,  and  from  time  to  time  appoint  a  new  trustee  or  trustees 
thereof,  and  may  make  provision  for  the  appointment  of  a  new 
trustee  or  new  trustees  thereof  and  for  the  investment  of  the 
moneys  payable  under  any  such  policy.  If  no  trustee,  moneys  vest 
in  executors,  &c. — In  default  of  any  such  appointment  of  a  trustee. 


(6)  Supra. 


268 


m\ 


mspcsrrioN  op  life  policies. 


*334 


such  policy,  immediately  upon  its  being  effected,  shall  vest 
in  the  ^insured  and  his  or  her  legal  personal  representatives  [*  333] 
in  trust  for  the  purposes  aforesaid .  Ncto  trustee. — I  fat  the  time 
of  the  death  of  the  insured  or  at  any  time  afterwards  there  shall  be  no 
truste'",  or  it  shall  be  expedient  to  appoint  a  new  trustee  or  new 
trust vies,  a.  trustee  or  trustees  or  a  new  trustee  or  new  trustees  may 
be  appointed  by  any  Court  having  jurisdiction  under  the  provis- 
ions of  the  Trustee  Act,  1850,  and  the  Acts  amending  and  extending 
the  same.  Receipt. — The  receipt  of  a  trustee  or  trustees  duly  ap- 
pointed, or  in  default  of  any  such  appointment,  or  in  default  of  no- 
tice to  the  insurance  office,  the  receipt  of  the  legal  personal  repre- 
sentative of  the  insured  shall  be  a  discharge  to- the  office  for  the 
bum  secured  by  the  policy  or  for  the  value  thereof  in  whole  or  in 

part." 

Surrender  of  policy. — Having  regard  to  the  words  in  s.  11  of  the 
Married  Women's  Property  Act,  1882,  declaring  that  a  policy  ef- 
fected thereunder  shall  create  a  trust  in  favour  of  the  objects  therein 
named,  and  the  moneys  payable  under  any  such  policy  shall  not, 
80  long  aa  any  object  of  the  trust  remains  unperformed,  form  part 
of  the  estate  of  the  insured,  it  would  seem  that  an  insurance  com- 
pany could  not  accept  a  surrender  of  such  a  policy  so  long  as  any 
object  of  the  trust  was  unperformed. 

Effect  of  policy  and  Act. — The  effect  of  the  policy  and  the  Act 
taken  together  is  to  constitute  a  decln  Lion  of  an  executed  trust, 
and  all  the  Court  has  to  do  is  to  exprcsa  its  view  of  the  construc- 
tion of  the  two  instruments  taken  together. 

Per  Chitty,  J.,  on  Married  Women's  Property  Act,  1882,  s.  11. — In 
the  11th  section  of  the  Married  Women's  Property  Act,  188!i?,  the 
words  ''separate  use"  are  omitted,  probably  because  the  Act  has 
previously  made  what  the  Legislature  considered  sufficie^:t  provis- 
ions as  to  the  property  of  a  married  woman  being  held  .or  her  sep- 
arate use,  and  it  was  considered  unnecessary  to  insert  any  further 
provisions  in  the  Uth  section.  There  is  another  difference  between 
the  words  of  that  section  and  the  corresponding  part  of  the 
10th  section  *of  the  Act  of  1870.  The  new  section  speaks  [*  334] 
of  a  policy  effected  by  a  man  "  for  the  benefit  of  his  wife, 
or  of  his  children,  or  of  his  wife  and  children  or  any  of  them." 
There  it  treats  the  interest  of  the  wife  and  the  mterest  of  the  chil- 
dren as  two  distinct  things.  That  is  an  indication,  though  a  slight 
one,  that  the  Legislature  never  intended  the  wife  and  children  to 
take  concurrently,  but  that  they  should  take  separate  interests;  ia 
other  words,  the  wife  and  children  do  not  take  together,  or  the  sur- 
vivors of  them,  but  the  wife  is  spoken  of  separately  from  the  chil- 
dren. That,  therefore,  shows  that  there  is  a  distinction  between 
the  wife  and  children  as  regards  the  interests  they  are  to  take  (c). 
Considering  that  the  Act  of  1882  deals  with  the  subject  of  policies 
for  the  benefit  of  the  wife  and  children  of  the  in^'ured  in  almost 


(r)  Por  Chitty,  J.,  Ro  Ailarns  Policy  Trusts  2'i  Ch.  1).  529-30,  supra,  p.  880  ; 
diacuBsed  iu  Heton  v.  Satterthwaite,  84  Gh.  D.  611,  86  W.  B.  873. 

269 


*335 


THE    LAWS   OF   IXSUnANCE. 


the  same  terms  as  the  Act  of  1870,  it  would  be  very  desirable  for 
the  offices  of  insurance  companies  to  have  a  form  of  settlement  for 
use  under  the  new  act  of  1882;  for  this  Act,  through  its  being  in 
almost  the  game  terms  as  the  Act  of  1870,  practically  leaves  mat- 
ters much  in  the  same  position  as  they  were  in  under  the  Act  of 
1870.  Wife  and  children  joint,  tenants. — In  a  more  recent  case  (d) 
the  wife  and  surviving  children  were  held  entitled  to  the  policy- 
money  as  joint  tenants. 

Interest  of  beneficiaries  contingent. — In  the  Married  Women's  Prop- 
erty Acts,  1870,  1882,  nothing  is  said  as  to  the  power  of  assignment 
of  a  policy  by  the  beneficiaries  before  the  death  of  a  settlor. 

It  would  seem,  however,  that  their  interests  are  all  contingent  on 
survival,  and  that  consequently  no  a-signraent  in  the  settlor's  life 
would  give  more  than  a  contingent  right  to  the  proceeds  of  the 
tru-it  policy  (e).  But  it  seems  that  such  a  policy  could  be  surren- 
dered by  the  beneficiaries  f  .r  its  surrender  value,  or  ox- 
[*  335]  changed  for  a  *paid  up  policy  (d),  and  the  Court  might  ap- 
point a  trustee  ior  the  purpose  where  necessary  (e). 

The  effect  of  an  appointment  by  a  settlor  of  policy-moneys  to  his 
executors  and  administrators  is  to  make  tho  policies  part  of  the  es- 
tate of  the  settlor,  subject  to  the  other  interests  created  by  the  set- 
tlement (/). 

Policy -moneys  no  part  of  husband's  estate. — The  moneys  payable 
under  a  policy  effected  by  a  husband  for  his  wife  and  children,  in 
conformity  with  the  Married  Women's  Property  Act,  1882,  do  not 
belong  to  his  estate,  except  in  the  event  of  the  beneficiaries  prede- 
ceasing him. 

The  husband  has,  therefore,  it  seems,  no  disposable  interest  in 
such  policy  otlier  than  that  arising  out  of  the  prospect  of  tho  pre- 
decease of  the  beneficiaries.  In  America,  to  a  suggestion  that  such 
a  provision  being  voluntary  was  in  the  nature  of  a  testamentary 
disposition  and  so  revocable,  the  Court  said  it  was  no  more  revoca- 
ble than  a  promissory  note  ig). 

In  Canada  it  has  been  held  that  a  policy  on  the  husband's  life 
for  the  benefit  of  his  wife  cannot  be  claimed  by  the  creditors  of 
either  spouse  Qi).  As  to  the  wife,  this  would  seem  true  so  long  as 
the  interest  was  only  contingent.  Creditors  entitled  topremiurns  after 
hmband'a  insolvency. — If  tho  husband  became  insolvent  after  insur- 
ing for  tho  benefit  of  his  wife,  it  seems  that  his  creditors  would  bo 
entitled  out  of  the  policy-money  to  the  amount  of  the  premiums 


(d)  Sdon  V.  SaUerthwaitc,  supra. 

':  j  Sco  Connrrticut  MufualLifc  v.  Burroughs,  .14  Conn.  aOfl,  014.  Ro  Adani' 
..„,..    T.   ►„.    ....     T  w.    „.«    .„  .    ^   ,.  ^  727,  81  W.  U.  810. 


N.  S. 


PoHcyri^  Ch.  D.  525,  52  L.  J.  (Jh.  C42,  48  L.^T. 

(d)  Ex  parte  Dever,  18  Q.  B.  1).  060. 

(«)  tichultze  V.  Slmltze,  56  L.  J.  Ch.  P56. 
/)  M'Kenzie  v.  M'Kemh;  21  L.  J.  Ch.  465,  15  Jur.  1091. 

\q)  Cnnnedkut  Mutual  Jj(fe  v.  Jiurroucfhs,  84  Conn  at  815. 

(ft)   Vilhnnv.  Marnouin,  18  Lr,  Can.  Jur.  249.     See  Levnardv.  Clinton,  20 
Hun.  (N.  Y.)  288,  and  Ex  parte  Dever,  supra. 

270 


DISPOSITION   OF   I IFE    POLICIES. 


*337 


paid  by  him  subsequent  to  his  insolvency  (i).  Policy  on  husband  for 
wife,  like  specific  legacy. — This  form  of  policy  may  be  likened  to  a 
gpecific  legacy  made  by  the  husband,  conditioned  on  its  being  ap- 
propriated for  the  benefit  of  the  wife  for  lier  support.  But  in  this 
country  it  is  not  a  legacy,  but  a  settlement,  and  U  not  liable  to  duty, 
not  being  i)art  of  the  husband's  estate. 

'^Pniicy  not  husband's  whilst  there  is  any  object  of  trust. — The  [*  336] 
jQ(  \  s  payable  under  a  trust  policy  effected  in  virtue  of 
tlio  M:irried  Women's  Property  Acts,  1870,  1882,  cannot  become 
part  of  the  husband's  estate  while  any  of  the  objects  of  the  trust 
continue.  Even  if  thera  be  no  trustee,  and  the  husband's  execu- 
tors or  administrators  are  therefore  the  persons  to  give  the  discharge 
to  insurers,  buch  executors  or  administrators  will  hold  the  moneys 
ad  trust-moneys,  and  not  as  part  of  the  assets  of  the  deceased  (k). 

The  trust- moneys,  of  course,  are  not  exempt  from  the  debts  of 
the  beneficiaries  named.  To  the  extent  of  their  interest  they  have 
the  ;:imc  }  iterest  as  assigns  would  have  in  a  sum  of  money  payable 
on  a  coii'  ittgency,  and  the  money  is  not  payable  in  such  a  manner 
as  not  to  be  answerablo  for  the  debts  of  the  beneficiaries  (/). 

Policy  for  xoife'a  benffit  not  to  be  surrendered  by  husband. — A  man 
who  effects  a  policy  on  his  own  life  for  his  wife's  benefit  cannot  sur- 
render that  policy  and  obtain  one  on  the  same  terms  witli  new  bene- 
ficiHries,  unless  the  wife  expressly  consents  that  hor  interest  shall 
be  divested  (m),  (*)  or  unless  the  wife  dies  before  iiim. 

A  ten  years'  policy  for  the  wife's  sole  use  will  not  enure  to  her 
benefit  if  the  husband  survives  the  ten  yeai  i,  and  an  ^alternative 
endowment  is  in  that  case  payable  (n). 

Assignment  and  charge  by  married  woman  of  her  trust  policy. — If  a 
married  women  be  induced,  without  fraud,  by  her  husband  to  as-i 
sign  or  incumber  her  interest  in  a  policy  on  his  life,  she  cannot  set 
the  transaction  asido  (o),  as  shecan  deal  with  her  interest  if  any  (p). 
But  settlement  of  policies  on  the  husband's  life  to  the 
*\vife's  separate  use  does  not  create  a  trust  for  separate  use  [*  337] 
till  his  death,  and  the  wife  cannot  charge  such  policies  while 
her  husband  is  living  (q). 

Policy  for  wife  8  benefit  not  actually  issued  till  death  of  husband  be- 
longs to  wife. — A  husband,  wlio  hud  already  effected  a  policy  in 
favour  of  his  wife  (under  Married  Women's  Property  Act,  1870). 
took  steps  to  effect  a  second  similar  insurance  with  the  same  com- 

[i]  Central  National  Bank  v.  Hume,  51  Am.  Rep.  780.  Married  Women'H 
Property  Act,  1882,  s.  11. 

(if)  Soo  Newman  v.  Belsten,  70  L.  T.  Journ.  228. 

(I)  Murraif  v.  WelU,  63  Iowa  256.     Smedley  v.  Felt,  43  Iowa  607. 

(m)  Packard  v.  Connertinit  Mutual  Life,  9  Missouri  (App.)  469  U.  S.  Digest, 
1881.  p.  4<iO.     Fortcacue  v.  liarneit,  8  My.  &  K.  ae,  2  L.  J.  N.  S.  Ch.  08. 

(h)  Te.irna  v.  North-Weatern  Midvxl,  20  Minn.  271. 
o)  Godfrey  V    fftfeoM,  70  Ind.  TO. 

\p)  Winter  v.  Eamm,  4  Do  G.  J.  &  S.  273,  33  L.  J.  Ch.  (505,  10  L.  T.  N.  S. 
775),  n  W,  R    1018. 

(g)  King  v.  Uicas,  23  Ch.  D.  712,  53  L.  J,  Ch.  102,  81  W.  R  "*1. 

*  .'^co  note  1  oil  page  829 

271 


i 


i 


ir 


I  ■; 


*338 


THE    LAWS   OF    INSUKANCE. 


pcany.  The  agent  to  whom  he  gave  his  instructions  and  paid  the 
first  premium  absconded,  and  the  assured  died  insolvent  before  Iho 
policy  was  issued.  The  written  proposals  contained  no  direction 
to  draw  the  policy  in  favour  of  tiie  wife,  nor  was  there  any  written 
evidence  of  the  deceased's  intention  to  that  effect.  The  company 
admitted  liability,  and  prepared  a  policy  dated  before  the  death 
without  reference  to  the  wiie.  The  creditors  in  an  administration 
action  claimed  the  moneys  thereunder,  but  Pearson,  J.,  held:— 

(1)  That  the  policy  issued  after  death  must  be  treated  as  non- 
existent at  death. 

(2)  That  the  only  question  was  the  form  in  which  the  policy 
ought  to  be. 

(3)  That  evidence  was  admissible  of  the  husband's  intention  and 
instructions  given  by  him  in  that  respect  (r). 

(4)  That  the  eviaence  adduced  proved  that  the  policy  was  in- 
tended to  be  in  the  wife's  favour,  and  that  she  therefore  was  en- 
titled to  the  moneys  as  against  the  creditors. 

Married  Women's  Policiea  o/Asmrance  (Scotland)  Act,  1880. — By  43 
&  44  Vict.  c.  26,  the  facilities  given  by  the  Married  Women's  Prop- 
erty Act,  1870,  for  the  benefit  of  married  women  and  children  in 

England  and  Ireland  are  extended  to  Scotland. 
[*  338]  *  A  policy  efiected  by  a  husband  upon  his  own  life  for  the 
benefit  of  his  wife  under  8. 2  of  this  Act  mav  be  surrendered 
by  the  trustee,  who  holds  it  with  the  concurrence  of  the  wife;  and 
(per  Lord  Shand)  it  may  be  surrendered  without  the  wife's  con- 
currence, jmless  the  insurance  company  have  notice  of  any  in- 
tended breach  of  trust  (s). 

Life  policiea  assignable  without  inaurer^a  conaent. — With  few  excep- 
tions, fire  policies,  unlike  life  policies,  cannot  be  mortgaged,  nor 
can  they  be  assigned  separately  from  the  property  to  which  they 
relate,  or  even  with  it,  save  by  the  consent,  which  cannot  be  com- 

Eelled,  of  the  insurer.    The  person  to  whom  a  lifo  policy  belongs, 
owever,  is  entitled,  by  act  inter  vivos  or  by  will,  to  make  an  abso- 
lute or  conditional  disposition  of  the  policy-moneys. 

Life  policy  aa  security — Life  policies  may  be  effected  or  mort- 
gaged— 

(1)  As  the  sole  security  for  a  debt  or  advance. 

(2)  As  a  further  security,  when  the  principal  security  for  the 
debt  is  property  in  which  tne  mortgagor  has  a  limited  or  termina- 
ble estate. 

In  the  first  case,  the  borrower  agrees  to  effect  or  to  keep  up  a 
pre-existing  policy  upon  his  own  life  for  the  security  of  the  mort- 
gagee. The  value  of  the  security  increases  daily  with  the  nearer 
approach  of  the  inevitable  event  upon  which  the  policy  is  made. 

The  mortgage  of  a  policy  of  assurance  is  similar  in  its  effect  to 
any  other  mortgage.    The  mortgagor  may  redeem  the  policy ;  and 

(r)  Newman  v.  Belsten,  76  L.  T.  J.  228,  affd.  by  C.  A  ,12  Feb.  1884. 
(s)  Schumann  v.  Scottiah  Widow^t  Fund  Society,  13  C.  S.  C.  (4th  series)  078, 
23  Sc.  L.  B.  474. 

272 


Tm 


DISPOSITION  OF  LIFE   POLICIES. 


*340 


his  legal  personal  representatives,  or  the  assignee  of  his  equity  of 
redemption,  are  entitled  to  any  surplus  proceeds  of  the  policy,  after 
paying  to  the  mortgagee  his  whole  debt,  interest,  and  costs. 

Mortgagee  can  keep  vj)  policy. — Such  a  policy  may  be  kept 
up  by  the  mortgagee  if  *the  mortgagor  fails  to  do  so,  and  [*  339] 
the  former  is  entitled  without  special  agreement  to  add  to 
the  amount  of  his  security  the  premiums  paid  by  him,  with  interest 
thereon,  on  the  ground  that  he  is  justified  in  using  all  proper  means 
for  preserving  his  security  (0-  The  premiums  advanced  uiid  in- 
terest would  form  a  charge  on  the  mortgaged  policy,  but  coUid  not 
be  recovered  against  the  mortgagor  personally  (u). 

Where  the  mortgagor  of  a  policy  who  had  become  bankrupt 
continued  to  pay  the  premiums,  although  by  the  bankruptcy  he 
was  relieved  from  the  obligation  to  do  so,  it  was  held  (x)  that  the 
premiums  so  paid  were  in  the  nature  of  salvage-moneys,  and  ought, 
as  against  the  mortgagee,  to  be  repaid  with  interest  out  of  the  policy- 
moneys;  but  this  decision  has  been  questioned  (y). 

Policies  given  by  way  of  security  not  the  same  aa  policies  taken  out  by 
creditor  on  own  account  for  such  purpose, — These  mortgaged  policies 
must  be  carefully  distinguished  irom  policies  on  the  life  of  the 
debtor  effected  or  kept  up  by  the  mortgagee  as  a  collateral  security 
at  his  own  expense  and  risk  without  any  contract,  express  or  im- 
plied, between  him  and  the  mortgagor.  In  such  a  policy  the  mort- 
gagor has  no  interest  whatever,  and  it  may  be  disposed  of  by  the 
mortgagee  just  as  he  likes.  It  is  only  a  collateral  provision  made 
by  him  for  his  own  benefit.  Receipt  of  the  amounts  assured 
thereby  would  be  no  discharge  to  the  mortgagor's  estate,  and  he 
cannot  as  of  right  claim  any  benefit  therefrom.  On  the  other  hand, 
the  mortgagee,  in  case  of  such  a  policy,  cannot  make  the  mortgagor 
pay  the  premiums  (2). 

When  policy  is  debtor'' s. — Where  a  creditor  efiects  a  policy 
of  insurance,  either  ^directly  or  indirectly  at  the  expense  [*  340] 
of  and  by  arrangement  with  his  debtor,  and  by  way  of  in- 
demnity to  the  creator,  the  policy,  on  payment  of  the  debt,  must 
be  delivered  up  to  the  debtor  (a). 

To  whom  policy  effected  by  grantee  of  annuity  belongs. — This  is  also 
the  case  where  the  relation  of  debtor  and  creditor  arises  upon  the 

(t)  2  Davidson  (4th  ed.),  pt.  2,  p.  63. 

(u)  Ibid,  note  (s). 

{x)  Shearman  v.  lirUinh  Empire,  Ac. ,  Co.,  14  Eq.  4,  41  L.  J.  Ch.  406,  26  L. 
T.  N.  S.  570.  20  W.  R.  C20. 

(w)  Saundera  v.  Dunman,  7  Ch.  D.  825,  47  L.  J.  Ch.  338,  38  L.  T.  N.  8.  410, 
20  W.  R.  8',)7.  And  sec  Falcke  v.  Scottish  Imperial,  per  Fry,  L.  J.,  84  Ch.  D. 
234,  a.-i  W.  R.  148. 

(z)  nnice  V.  Garden,  G  C!..  App.  33,  39  L.  J.  Ch.  884,  22  L.  T.  N.  S.  595.  18 
W.  R.  384.  But  ti  dcclnrution  tnnt  tho  creditor  is  interested  is  desirablo  if  not 
necessary;  lVin(on\.  Hardy,  14  Ben  v.  238. 

(rt)  Lea  V.  Hinton,  24  L.T.  101,  19  Beav.  824,  6  De  G.  M.  &  G.  828,  Drysdale 
V.  Piqotl,  21  Bettv.  2.<8,  8  Do  G.  M.  &  G.  540,  27  L.  T.  810.  4  W.  R.  77a,  25  L. 
.T.  CK.  878. 


:'  m 


■!  .): 


18  POBTEll  ON  INSUliANUE. 


273 


341 


THE   LAWS  OP  INSURANCE. 


m 


:j,ll 


grant  of  a  life  annuity  (6),  and  an  insurance  has  been  similarly 
effected  by  the  gtantee  to  secure  the  repayment  of  the  money  in 
consideration  of  which  the  annuity  was  granted  (c). 

Where,  however,  nn  annuity  ia  granted  with  a  mere  option  to 
the  grantor  of  re-purchase  or  redemption,  d  an  insurance  is  ef- 
fected by  and  in  the  name  of  the  grantee,  -at  with  the  money  of 
the  grantor,  and  there  is  no  further  evidence  of  a  contract  between 
the  parties  that  the  policy  should  belong  to  the  grantor,  it  belongs 
on  re-pi'irchase  or  redemption  of  the  annuity  to  the  grantee  (d). 
And  where  the  grantee  of  an  annuity  insured  the  life  for  which  the 
annuity  was  granted  without  there  being  any  stipulation  on  the 
subject  between  him  and  the  grantor,  it  was  held  that  the  latter 
had  no  right  to  have  the  policy  delivered  to  him  (e). 

Insurance  by  mortgagee  of  annuity. — But  where  a  mortgagee  of  an 
annuity  insured  the  lifo  of  his  mortgagor,  and  wrote  to  him  saying 
that  on  redemption  of  t'je  annuity  the  policy  should  be  assigned 
to  him,  and  the  mortgagee  paid  the  premiums,  on  the  death  of  the 
mortgagor  without  having  redeemed  the  annuity  the  mortgagee 
was  held  to  bo  entitled  to  the  full  benefit  of  the  policy  (/). 
[*  341]  *Arredrsof  annuitymay  boinsuredlikcany  otherdebt(/). 
Creditor  insuring,  and  policy  belonging  to  creditor. — If  a  cred- 
itor insures  his  debtor's  life,  and  there  is  no  evidence  of  a  contract 
between  the  parties  on  the  subject  of  the  policy  and  the  payment 
of  the  premiums,  the  debtor  or  his  representativt  will  have  no  claim 
to  the  policy  (gr).  In  Bruce  v.  Garden  the  piemioms  paid  were 
carried  to  the  debit  of  the  debtor's  account  witli  his  army  agent, 
and  he  was  aware  that  the  policies  had  been  effected ;  but  there 
was  no  evidence  that  the  account  had  ever  been  shown  to  him,  or 
that  he  knew  that  he  was  in  the  account  charged  with  the  prem- 
iums. Held,  reversing  the  decree  of  James,  V.  C,  that  the  iirmy 
agent  was  entitled  io  retain  the  sums  received  upon  the  policies 
after  the  death  of  the  officer,  and  was  not  liable  to  account  for 
them  to  his  representative.  Rule  stated,  -per  Hathcrlci/,  L.  C— 
Hatherley,  L.  C,  said  :  "There  must  be  distinct  cvidenco  of  a  con- 
tract that  the  creditor  has  agreed  to  effect  a  policy  and  thatthodebtor 
has  agreed  to  pay  the  premiume ,  and  in  that  case  the  policy  will 
be  held  in  trust  for  iho  debtor." 

Mortgage  of  policy  by  debtor  to  creditor.     Debtor'' s  opinion  to  purchase 


(6)  See  Denman  v.  ScoUuh  Widows'  Fund.  3  Times  L.  R.  526. 

(c)  Courtenmj  v.  Wright,  2  Giff.  337,  30  L.  J.  Cb.  131,  3  L.  T  N.  S.  483,  0 
W.  R.  153. 

(d)  Gottlieb  v.  Crunch,  4  Dc  G.  M.  &  G  440,  22  L.  J.  Ch.  9l2.  17  Jur.  C8C. 
704.  Knox  ••.  Turner,  5  Cli.  App.  5ir,,  39  L.  J.  Ch.  750,  23  L.  T.  N.  S.  227,  U 
W.  R.  873.    Preston  v.  iW/r,  12  Ch.  I).  700,  40  L.  T.  N.  S.  303,  27  W.  R.  642. 

(e)  Ex  I'arto  Jjo.ncanter,  4  Do  G.  &  Sm.  524. 

(/)  Bmhfurd  v.  Cann,  81  IJeav.  100,  9  L.  T.  N.  «.  43,  11  W.  R.  1037. 

(/)  Ex  parte  Day,  7  Vcs.  802. 

(tf )  linica  V.  Garden,  L.  R.  5  Ch.  App.  32,  39  L.  J.  Ch.  884,  18  W.  R.  884,  22 
L.  T.  N.  S.  595.  Siwmon  v.  Walker,  %  L.  J.  N.  8  Ch.  55.  Brown  v.  Freeman, 
4  De  0.  &  Sm.  444. 

274 


:m 


DISPOSITION   OF   LIFE   POLICIES. 


*342 


p(^icyfrom  creditor. — Whether  a  policy  belongs  to  the  debtor  or  the 
«>ediior  is  a  question  which  has  arisen  where  the  creditor  has 
himself  paid!  the  premium,  and  it  seems  that  if  the  policy  has 
been  mortgaged  by  the  debtor  to  the  creditor,  then,  notwithstand- 
ing the  premiums  have  been  paid  by  the  creditor,  it  will  belong  to 
Uie  debtor ;  but  if  the  debtor  has  only  an  option  of  purchasing  the 
policy  from  the  creditor  on  the  debt  being  paid,  it  will  belong  to 
the  creditor ;  and  if  the  debtor  die  before  his  option  is  exercised, 
the  creditor  will  be  entitled  to  receive  the  insurance-money  for  his 
own  use  (h). 

Policy  on  arwther'a  life  generally  belongs  to  grantee  ofp^iicy. — 
In  the  absence  of  contract,  express  or  implied,  a  ^policy  ef-  [*  342] 
fected  on  the  life  of  another  will  belong  to  the  person  who 
effects  it  (i).  Rule  where  grantee  is  debtor. — But  if  the  policy  be 
taken  out  in  the  name  of  a  creditor,  and  the  premiums  are  paid  by 
the  debtor,  or  he  is  charged  with  them  in  account,  the  onus  lies  on 
the  creditor  to  prove  that  the  policy  is  his  (k) ;  and  if  it  is  other- 
wise to  be  inferred  that  the  insurance  was  intended  as  a  security 
^ma  facie  the  policy  will  be  the  property  of  the  debtor,  after  satis- 
fection  of  the  debt  (/).  Grantee  of  annuity  insuring  grantor^s  life. — If 
the  grantee  of  an  annuity,  by  way  of  security,  or  other  mortgagee 
insures  the  grantor's  life,  or  if  a  creditor  insures  his  debtor's  life, 
and  pays  the  premiums  out  of  his  own  pocket,  the  policy  belongs 
to  the  grantee  or  creditor.  The  debtor  cannot  require  the  creditor 
to  keep  up  the  policy,  and  the  receipt  by  the  grantee  or  creditor 
of  the  insurance-money  does  not  satisfy  or  discharge  the  debt  (m). 

Charging  debtor  with  premiums  will  not  per  se  make  policy  his. — 
Charging  the  debtor  with  the  premiums  in  his  accounts  by  the 
creditor  will  not  give  the  debtor  a  right  to  the  policv  in  the  absence 
of  evidence  that  the  debtor  knew  he  was  so  charged!,  or  that  he  had 
agreed  to  pay  such  premiums  (n).  If,  however,  upon  the  insurance 
by  the  creditor,  it  be  agreed  or  can  be  inferred  that  the  debtor 
nhall  be  charged  with  the  premiums,  and  that  the  policy  is  ef- 
fected as  a  security  or  indemnity,  the  policy  or  the  balance  of  the 

(h)  Lewis  v.  A7nj7,  44  L.  J.  Ch.  259,  31  L.  T.  N.  S.  571. 

(i)  Brown  v.  Frecmun,  4  De  G.  &  Sm.  444.  GottHeh  v.  Crnnch,  4  De  G.  M. 
k  G.  440,  17  Jur.  704,  22  L  J.  Ch.  012.  Freme  v.  Jirade,  2  De  G.  &  J.  582,  6 
W.  R.  739.     Banhford  v.  Cann,  ;13  Hcav   109,  9  L.  T.  N.  S.  4H,  11  W.  R.  1037. 


Bruce  v.  Garden,  5  Ch.  App.  3'2,  18  W.  R.  384,  39  L.  J.  Cli.  334,  22  L.  T.  N.  S 
595.     Knox  \.  '" 
L.  T.  N.  S  227 


I.  A  pp.  h; 
,  L,  11.  5 


Ch.  App.  515,  18  W.  R.  873,  39  L.  J.Ch.  750.  '.'8 


(k)  Pflcqcr  V.  Browne,  28  Roav.  391.  Holland  v.  Smith,  0  Esp.  11.  Norland 
V.  Imac,  20  Beav.  889.  Drysdalc  v.  PigoU,  8  Do  G.  M.  &  G.  546,  25  L.  J.  Ch. 
878,  27  L  T.  810,  4  W.  R.  773. 

(/)  Williams  V.  Atki/m.  SJo  k  liiit  (Ir  )003.  Hawkins  v.  Woodgate,  7  Beav. 
565.  fMt  V.  lliiiton,  5  De  U.  M.  &  ().  823,  24  L.  T.  101.  Ex  parte  Andreivs,  2 
Rose  410,  1  Mtuld.  573.     Lewi^^^  v.  Kijig,  supra. 

(m)  Gottlieb  v  Cranch,  supra.  Williams  v.  Atkyns,  siipra  Humphreys  v. 
Arabin,  LI.  &  Goold  (Plunkottl  318.     K.v  parto  Lancaster,  4  De  G.  &  Sm.  524. 

(n)  Bruce  v.  Garden,  L-  it.  5  Ch.  82,  tngtra,  note  (i). 

275 


*344 


THE   LAWS   OF   INSURANCE. 


[*  343]  ^insurance  money  after  discharge  of  the  debt  will  be  the 
debtor's,  and  it  will  be  immaterial  in  such  a  case  that  the 
premiums  were  not  actually  paid  by  the  debtor,  if  he  has  been 
charged  with  them  in  account  by  the  creditor,  and  has  not  disputed 
his  liability  to  pay  them  (o). 

Payment  of  premiums  by  mortgagee  will  not  deprive  mortgagor  of  poU 
icy. — As  the  mere  non-payment  by  the  mortgagor  of  a  charge  at- 
tributable to  the  mortgaged  property  cannot  have  the  effect  of  fore- 
closure, the  payment  of  the  mortgagee  of  the  premiums  on  the 
mortgagor's  refusal  will  not  divest  the  right  of  the  latter  to  the  pol- 
icy after  repayment  by  him  of  the  advances  with  interest  (p).  The 
circumstance  that  an  allowance  for  insurance  was  included  in  the 
calculation  of  the  consideration  will  not  entitle  the  debtor  to  a  pol- 
icy kept  up  by  the  creditor,  if  there  were  no  stipulation  by  the  deb- 
tor for  an  insurance.  The  matter  is  then  at  the  option  of  the  credi- 
tor, who,  whether  he  effects  an  insurance,  or  by  retaining  the  money 
becomes  his  own  insurer,  is  equally  entitled  to  the  benefit  of  the 
arrangement  (q). 

Where  creditor  placed  in  position  oftntstee,  he  must  account  for  policy 
money  after  deducting  premiums, — If  by  the  terms  of  the  security  it- 
self the  creditor  be  placed  in  the  position  of  a  trustee,  as  if  the  se- 
curity be  assigned  to  him  upon  trust,  after  payment  of  costs,  to  re- 
tain the  debt  and  pay  over  the  surplus,  he  must  account  for  the  in- 
surance-money after  deducting  the  premiums,  being  within  the 
principle  which  forbids  dealing  by  a  trustee  with  the  trust  estate 

for  his  own  benefit  (r). 
[*  344]  *An  agreement  may  be  expressed  or  inferred,  under  which 
the  debtor  shall  take  the  benefit  of  the  insurance.  What  is 
evidence  that  policy  should  be  re-assigned  with  principal  security  on  re- 
demption.— Thus  an  agreement  (s)  that,  if  redemption  shall  take 
place  after  the  premiums  shall  have  been  paid  for  the  current  year, 
the  mortgagor  shall  repay  to  the  mortgagee  such  proportion  of  that 
premium  as  shall  belong  to  the  then  unexpired  part  of  the  current 
year,  has  been  held  to  be  sufficient  evidence  of  an  intention  that 
the  policy  should  be  assigned  with  the  principal  security  upon  re- 
demption, even  without  regard  to  subsequent  words  importing  yet 
more  clearly  a  right  in  the  mortgagor  to  require  an  assignment  of 

(o)  Holland  \.  Smith,  Q'Esg.  11.  Morlandv.  Isaac,  20  Beav.  88!).  Brown 
V.  Freeman,  4  De  G.  &  Sm.  444.  Henson  v.  Blackwell,  4  Hare  484,  14  L.  J.  Ch. 
829,  9  Jur.  390.  Re  Storie'a  Trusts,  1  Giflf.  94,  6  Jur.  N.  S.  1153,  28  L.  J.  Ch. 
888,  34  L.  T.  20.  Courtney  v.  Wright,  30  L.  J.  Ch.  131,  8  L  T.  N.  S.  433, 2  Giff. 
8:^7,  9  W.  It  153.  Lea  v.  Hinton,  24  L.  T.  101,  6  De  G.  M.  &  G.  82:<.  Freme 
-  lirude,  2  De  G.  &  J.  58?,  0  W.  R.  739,  4  Jur.  N.  S.  746,  Fiaher  on  Mortgages 


974  (4tU  ed  ) 

( «)  Drysdale  v.  Pigott,  8  De  G.  M.  &  G.  546,  22  Beav.  288,  25  L.  J.  Ch.  878, 
5  W.  R.  773,  22  L.  T.  193. 

(q)  Freme  v.  Brade,  supra, 

(r)  Ex  parte  Andrews,  Re  Emmett,  2  Rose  410,  1  Madd.  573,  Fisher  on  Mort- 
gages 975  (4th  ed. ). 

(»)   Williams  v.  Atkyna,  2  Jo.  k  Lat.  (Ir.)  608. 

27G 


DISPOSITION   OF   LIFE   POLICIES. 


345 


the  policy.  But  the  passing  of  letters  between  the  parties  which 
refer  to  the  necessity  for  the  insurance,  or  a  provision  in  the  princi- 
pal eecurity  for  payment  by  the  debtor  of  the  additional  premiunas 
which  in  certain  events  might  become  payable  upon  the  policy,  or 
a  covenant  by  the  cestui  que  vie  of  the  annuity  to  do  the  necessity 
acts  for  the  effecting  of  the  insurance,  are  not  sufficient  (t)  to  give 
the  mortgagor  or  grantor  of  th^  annuity  a  title  to  the  policy,  for 
these  are  only  statements  of  or  references  to  the  terms  upon  which 
the  transaction  was  afifected,  and  afford  no  evidence  of  a  contract 
which  will  take  the  ca«e  out  of  the  general  rule.  Letters  as  evidence 
of  right  to  policy. — It  seems  that  letters  which  have  passed  between 
the  parties  may  be  looked  at  in  order  to  ascertain  whether  there 
were  any  contract  concerning  the  right  to  the  policy,  where  there  is 
no  discrepancy  between  the  letters  and  the  securitv  (m),  though  it 
would  be  otherwise  if  the  effect*  of  the  letters  would  be  to  vary  the 
stipulations  of  the  security  (x). 

Contract  that  'policy  shall  be  re-assigned. — Where  there  is  an  express 
contract  that  the  policy  shall  be  re-assigned  upon  the  se- 
curity being  redeemed,  *if  the  grantor  shall  elect  to  take  it,  p  345] 
the  grantee  may  not,  either  before  or  after  election,  part 
with  the  policy  for  his  own  benefit  (y). 

Position  of  creditor  with  surety  for  debt,  insuring  debtor^ s  life. — Where 
a  creditor  whose  debt  is  secured  by  sureties  insures  the  life  of  the 
principal  debtor,  he  is  perfectly  free  to  assign  over  such  policies  to 
the  debtor  or  any  one  or  more  of  the  sureties  paying  the  principal 
debt.  Position  of  sureties  inter  se. — But  as  between  the  sureties  no 
one  of  them  can  by  paying  the  debt,  and  obtaining  such  assign- 
ment, appropriate  the  whole  benefit  of  the  policy,  and  claim  con- 
tribution from  his  co-sureties  as  though  such  policy  never  existed. 
To  give  him  such  a  right,  the  others  must  abandon  or  disclaim  all 
benefit  of  the  policy  (z). 

Surety  can  deduct  sums  spent  in  keeping  up  policy. — But  the  surety 
who  takes  over  the  policy  is  entitled  in  an  action  for  contribution 
to  deduct  from  the  amount  received  on  the  policy  all  sums  spent 
by  him  in  keeping  it  up,  since,  as  the  benefit  is  joint,  the  burden 
must  be  so  also  (a). 

Creditor  within  rule  ttiat  trustee  may  not  make  profit. — Where  a  con- 
tingent interest  was  assigned  upon  trust  to  secure  a  debt,  and  the 
creditor  insured  against  the  contingency  and  received  the  insur- 
ance, he  was  held  to  be  within  the  principle  which  prohibits  a 
trustee  from  making  an  advantage  out  of  his  trust;  and,  the  debtor 
being  bankrupt,  the  creditor  was  permitted  to  prove  only  for  the 

(t)  Gottlieb  V.  Cranch,  4  De  G.  M.  &  G.  440,  22  L.  J.  Ch.  912, 17  Jur.  704,  Fisher 
on  Mortgages  976  (4th  ed.)- 
(m)  Gottlieb  v   Cranch,  impra.  • 

(a;)  Squire  v.  Campbell,  1  Myl.  &  C.  458,  Fisher  on  Mortgages  977  (4th  ed.). 
(y)  Hawkins  v.  Woodgate,  7  Beav.  565,  8  Jur.  748. 

(z)  Atkina  v.  Arcedeckne,  24  Ch.  D.  709,  58  L.  J.  Ch.  64,  48  L.  T.  N.  S.  725.. 
(a)  Ibid. 

277 


«i '  M 


U\ 


m 


!      '1/ 


5.i'  !       f.i 


34'; 


THE    LAWS  OF  INSURANCE. 


balance  of  the  debt  (6).  Life  policy  is  ^'properly." — A  mortgage  of  a 
life  policy  is  a  mortgage  of  "property"  so  as  to  require  an  ad  vol. 
stamp  (c).  Succemon  duty  not  payable. — A  life  policy  does  not 
create  the  relation  of  predi  cessor  and  successor  between  the  insur- 
ers and  the  assured,  or  any  assignee  of  the  assured,  so  as  to  attract 

succession  duty  (d). 
[*  346]  '■^Policy  as  collateral  security,  mortgagor's  interest  being  de- 
feasible.— In  the  second  class  of  mortgages  of  life  policies 
come  tenants  for  their  own  or  other  lives,  annuitants,  or  persons 
with  a  defeasible  interest  in  mortgaged  property.  In  sucli  cases 
according  to  the  tenure  of  the  mortgagor,  insurance  is  made  either 
on  his  own  life  or  on  the  life  upon  the  duration  of  which  his  inter- 
est depends.  And  such  insurance  is  a  further  security  to  the  mort- 
gagee in  case  the  tenant  for  life  dies  without  paying  the  mortgage- 
money,  or  the  tenant  for  life  loses 'his  estate  by  the  death  of  the 
cestui  que  vie. 

The  mortgagee  may  make  such  an  insurance  a  condition  prece- 
dent to  lending,  and  there  is  no  objection  to  such  a  policy  being 
effected  in  the  name  of  the  mortgagor;  but  the  mortgagee  should 
be  careful  to  ascertain  that  the  mortgagor  has  an  actual  and  insur- 
able interest  in  the  life  insured  at  the  time  the  policy  was  effected. 
Court  cannot  compel  insurance  for  the  purpose  of  perfecting  security. — 
But  he  is  under  no  obligation  independently  of  contract  to  effect 
such  an  insurance,  and  the  High  Court  of  Justice  has  no  more 
power  than  had  the  Court  of  Chancery  when  directing  money  to 
be  raised  upon  estates  of  the  kind  now  in  question  to  compel  per- 
sons who  have  an  insurable  interest  in  the  lives  upon  which  such 
estates  depend  to  effect  policies  on  such  lives  as  part  of  the  security 
for  the  money  directed  to  be  raised  (e),  nor  can  a  bankrupt  be 
obliged  to  insure  himself  or  be  examined  with  a  view  to  insur- 
ance (/). 

Mortgagee  can  add  premiums  to  security. — In  such  mortgages  it  is 
usual,  if  not  invariable,  for  the  mortgagor  to  covenant  to  pay  the 
premiums.  If  he  fails  to  do  so,  the  mortgagee  can  pay  them,  and 
add  them  to  his  security.  If  the  policy  be  let  drop,  or  none  be  ef- 
fected or  stipulated  for,  the  mortgagee  clearly  has  an  insurable  in- 
terest in  an  event  which  may  terminate  his  security  such  as  to  en- 
able him  to  insure  the  life  of  the  tenant  for  life  or  cestui  que 
[*  347]  vie.  If  he  does  so,  the  ^insured  is  wholly  his  own,  and  the 
mortgagor  has  no  claim  on  it  (/). 


(6)  Ex  parte  Andrews^  2  Rose  410,  1  Madd.  573. 

(c)  Caldwell,  v.  Dawson,  5  Ex.  1,  14  Jur.  316. 

(d)  16  &  17  Vict.  c.  61.  s.  17. 

(«)   Grantley  v.  Garthwaite,  6  Madd.  96  Fisher  on  Mortgages  (4lh  cd.)  13. 

(/)  Ex  parte  Bullock,  16  Q.  B.  D  698.     Re  Betts,  Times  L.  R.  598. 

(/)  Gottlieb  V.  Cratich,  4  De  O.  M.  &  G.  440,  17  Jur.  704,  22  L.  J.  Ch.  912. 
Williams  v.  Atkyns,  2  Jo.  &  Lat.  (Ir.)  603.  Bashford  v.  Cann,  33  Beav.  109,  9 
L.  T.  N.  S.  43, 11  W.  R.  1037.  Humphrey  v.  Arabin,  LI.  &  Goold  {temp.  Plunkett) 
218.  Ex  parte  Lancaster,  4  De  G.  &  Sm.  634  See  also  Knox  v.  Turner,  5  Ch. 
App.  615,  39  L.  J.  Ch.  760,  23  L.  T.  N.  S.  227,  18  W.  R.  878. 

8!li 


DISPOSITION   OF  LIFE   POLICIES. 


*348 


Pmer  of  sale  on  breach  of  covenant  to  insure.  Power  to  appoint  re' 
ceiva-.—By  s.  19  of  the  Conveyancing  Act,  1881,  a  power  of  sale 
ia  made  an  incident  of  all  statutory  mortgages  in  the  absence  of  any 
contrary,  varying,  or  limiting  stipulation.  And  by  s.  20  (iii.)  there- 
of such  power  of  sale  will  arise  on  breach  of  a  covenant  to  keep  on 
foot  a  life  policy  or  policies  as  a  collateral  security  to  the  mortgagee 
of  the  life  interest  (g),  and  the  power  to  appoint  a  receiver  given  by 
8.  24,  where  the  power  of  sale  has  arisen,  enables  a  mortgagee  to 
appoint  such  receiver  and  authorize  him  in  writing,  sub-s.  8  (iii.), 
to  employ  the  moneys  received  by  him,  after  satisfying  certain 
prior  outgoings,  in  paying  the  premiums  upon  life,  fire,  or  other 
policies  properly  payable  under  the  mortgage  deed. 

How  proceeds  of  policy  applicable. — By  s.  22  (2)  the  proceeds  of  a 
life  policy,  which  is  a  security  within  tlie  mortgage  deed,  are  to  be 
applied  as  money  arising  from  a  sale  of  mortgaged  property  (A). 

Policy  is  ^' property.'' — A  life  policy  is  property  within  the  mean- 
ing of  s.  19  (1),  see  s.  2  (1),  and  the  power  of  sale  consequently  ap- 
plies to  that  also,  as  well  as  to  any  realty  or  chattels  within  a  mort- 
gage deed.  So  that  the  mortgagee  can  sell  and  assign  (i)  a  life  pol- 
icy if  the  mortgagor  does  not  comply  with  the  terms  of  the  mort- 
gage deed.    He  can  also  forclose  {k). 

Mortgage  upon  trust:  mortgagee  cannot  sell. — In  Dyson  v.  Morris  (J) 
it  was  held  bjr  Wigram,  V.  C.,  that  although  on  a  simple 
mortgage  of  a  policy  of  *assurance  the  mortgagee,  in  default  [*  348] 
of  payment,  is  entitled  to  a  sale  under  the  decree  of  a  Court 
of  Equity,  yet  if  the  policy  have  been  assigned  to  the  mortgagee 
upon  trust  to  receive  the  money  to  become  payable,  and  thereout  to 
pay  the  expenses  and  mortgage  debt,  and  pay  the  residue  to  the 
mortgagor,  the  Court  cannot  direct  a  sale  of  the  policy.  The  mort- 
gagee must  wait  until  the  death  of  the  mortgagor  before  he  can 
mal  e  his  security  available. 

Covenant  to  keep  up  policy.  Breach.  Damages. — Where  a  policy  of 
life  assurance  is  mortgaged,  and  the  mortgagor  covenants  to  keep 
up  and  restore  the  policy,  and  breaks  his  covenant,  the  mortgagee 
has  an  action  for  damages,  and  the  measure  of  damage  is : — 

(i.)  The  amount  of  premiums,  if  any,  paid  by  the  mortgagee  to 
keep  up  the  policy  and  interest  thereon. 

(ii.)  The  amount  necessary  to  renew  the  policy,  if  it  has  dropped 
in  consequence  of  the  mortgagor's  default  (m). 


1M 


(g)  WolRtenholme  &  Turner's  Coiiv 
(h)  See  Boswell  v.  Coaks,  23  Ch.  D 


Act  (3rd  ed.)  p.  66. 
302. 


(t)  But  see  Drysdale  v.  Pigott,  8  De  G.  M.  &  G.  540,  22  Beav.  238,  25  L.  J. 
Ch.  878,  27  L   T.  310,  4  W.  R.  773,  2  Jur.  N.  S.  1078. 

(fc)  Parker  v.  Marquis  of  Anglesey,  20  W.  R.  162,  25  L.  T.  N.  S.  482.  Kings- 
fwd  V.  Swinford,  7  W.  R  663. 

(I)  1  Hare  413. 

(m)  2  Dav.  Gonv.  pt.  2,  68,  and  cases  there  cited.  Fisher  on  Mortgages  461 
(4th  ed.) 

279 


i3 


^< 


>. 


o  ».^. 


IMAGE  EVALUATION 
TEST  TARGET  (MT-3) 


1.0 


I.I 


feSIM    |2.5 


140 


11-25  i  1.4 


M 


1.6 


HiotDgraphic 
.Sciences 
Carporation 


23  WIST  MAIN  ITRIIT 

WIUTIR.N.Y.  USSO 

(7I*)I72-4S03 


4^ 


^v 


k 


J. 


\ 


*349 


THE   LAWS  OP  INSURANCE. 


(iii.)  In  case  of  a  loss,  the  amount  of  the  loss  (not  exceeding  the 
mortgage  debt)  (n). 

Where  the  covenantor  commits  suicide,  the  policy  being  on  his 
own  life  and  in  trust,  the  trustees  cannot  recover  damages  from  his 
general  estate  under  such  covenant  (o). 

CovenarU  to  repay  premiums.  Damages  for  breach. — ^Where  the  mort- 
gage deed  contains  a  covenant  by  the  mortgagor  to  repay  any  pre- 
miums paid  by  the  mortgagee,  the  latter  has  his  remedy,  either  on 
that  covenant  for  the  amount  so  paid  by  him,  or  on  the  covenant 
to  keep  ur  iho  p.>licy,  in  which  latter  case  the  measure  of  damages 

wr-  -i  be  just  the  same  where  no  loss  had  happened. 
[  *349]  ^(.hi  :'.&rU  to  keep  up  policy  and  power  to  add  premiums  to 
de6«.---V,'here  the  mortgage  contains  a  covenant  by  the 
mortgagor  t(> '.  eep  up  the  policy,  but  no  covenant  by  him  to  repay 
to  the  mortgagee  any  premiums  spent  by  him,  but  a  power  to  pay 
and  add  to  the  mortgage  debt,  only  nominal  damages  will  be  given 
in  an  action  for  breach  of  the  covenant  (p),  as  the  deed  itself  pro- 
vides a  remedy  for  the  breach  by  adding  the  sums  paid  to  tLo 
mortgage  debt. 

Mortgage  to  company,  premiums  ^^just  allowances." — Where  a 
policy  has  been  mortgaged  to  the  insurers,  and  the  mortgagor  has 
agreed  but  failed  to  pay  the  premiums,  they^  will,  on  taking  the 
accounts,  be  treated  as  just  allowances  to  the  insurers  as  mort- 
gagees (g),  if  they  have  kept  alive  the  insurance,"  but  not  other- 
wise (r).  If  allowed,  they  will  be  added  to  and  bear  interest  at 
the  same  rate  as  the  principal  debt. 

Mortgagee  cannot  add  premiums  unless  express  contract.  Except  un- 
der Conveyancing  Act,  1881. — A  mortgagee  could  not  insure  and  add 
the  premiums  to  the  mortgage  debt  in  the  absence  of  an  express 
contract  authorizing  him  to  do  so  (a).  This,  however,  is  varied  by 
44  &  45  Vict.  c.  41,  s.  19  (ii.),  under  which  a  mortgagee  may  insure 
against  loss  by  fire,  and  the  premiums  will  be  a  charge  on  the 
property. 

Execatw  should  keep  up  policy. — An  executor  who  dropped  a 
policy  on  the  life  of  a  debtor  to  the  testator's  estate  without  con- 
sulting those  beneficallv  interested  has  been  held  liable  for  the 
whole  sum  which  would  have  been  received  if  he  had  kept  up  the 
policy  (0- 

Breach  of  covenant  by  going  out  of  Europe.  Damages. — Where  a 
deed  by  which  the  defendant  assigned  to  the  policy  on  his  own 
life  contained  a  covenant  that  he  would  not  do  anything  to 


in)  Mayne  on  Damages  241  (8rd  ed.) 
o)  Dormay  v.  Borrodaile,  10  Beav.  885,  per  Lord  Tjangdale. 
p)  Brown  v.  FHce,  4  Jur.  N.  8.  882,  «  W.  R.  721,  Fisher,  p. 
Cq)  Fit9  William  v.  Price,  4  Jur.  N.  8.  889,  81  L.  T.  880.      Bro 


851  (4th  ed). 
room  V.  Price, 


8upra> 


(r)  Ghrav  v.  Ellison,  1  Giff.  488,  Fisher,  p.  861  (4th  ed.)  3  Jur.  N.  8.  511, 
L.  J.  Ch.  066,  4  W.  R  497,  27  L.  T.  166. 
lt{  Brooke  v.  Stone,  84  L.  J.  Ch.  26.  12  L.  T.  N.  8.  114,  18  W.  R.  401. 
(t)  Oamer  v.  Moore,  8  Drew,  277,  24  L.  J.  Ch.  687. 

280 


26 


DISPOSITION   OF  LIFE   POLICIES. 


*350 


forfeit  tbe  policy,  and  a  forfeiture  accrued  through  the  *de-  [*  350] 
fendant's  going  beyond  the  limits  of  Europe  without 
the  license  of  the  company,  the  damages  were  assessed  upon  the 
present  value  of  the  policy,  to  be  calcubited  by  an  actuary,  taking 
into  consideration  that  the  der3ndant  covenanted  to  pay  and  should 
pay  premiums  on  the  policy  (m). 

What  a  mortgage  of  life  policy  should  contain. — Where  a  policy  of 
life  assurance  is  mortgaged,  the  mortgage  deed  should  contain : — 

(i.)  A  covenant  to  keep  up  the  policy. 

rii.)  A  covenant  to  restore  it  if  it  lapses. 

(iii.)  An  authority  to  the  mortgagee  to  keep  up  or  restore  the 
insurance,  in  case  of  default  by  the  mortgagor,  and  to  recover  the 
money  so  expended,  or  to  add  premiums  to  the  mortgage  debt. 

Money  advanced  for  keeping  up  a  mortgaged  policy  or  effecting 
a  new  policy  in  lieu  thereof  is  exempted  from  the  ad  valorem  stamp 
duty  by  the  Stamp  Act,  1870  (w),  s.  107. 


i: 


u)  Hawkins  v.  Coulthurat,  5  B.  &  S.  343,  83  L.  J.  Q.  B.  192.  12  W.  R.  825. 
p)  83  &  84  Vict  c  97. 


'MM 

;    ■  ( 


m 

it 


'^1 


mm 
mm 


281 


"•OOli 


THE  LAWS  OF   UiSUilAXCK. 


[*351] 


♦CHAPTER  XVIIL 


LIEN. 


Policies.  Lien.  Leslie  v.  French. — Besides  rights  to  or  in  policies 
accruing  to  persons  (other  than  the  person  taking  out  the  same)  by 
way  of  assignment  or  charge,  numerous  questions  arise  as  to  lien 
on  policies.  In  a  very  recent  case,  Leslie  v.  French  (a),  the  law  as 
to  one  branch  of  this  subject  has  been  summed  up  and  digested  by 
Fry,  L.  J.,  who  said  as  follows:— 

Lien,  may  arise  by  paying  premiums. — "A  lien  may  be  created  upon 
the  moneys  secured  by  a  policy  by  payment  of  premiums  in  the 
following  cases: — 

Contract  toith  owner. — "1.  By  contract  with  the  beneficial  owner 
of  the  policy  (*). 

By  virtue  of  trusteeship. — "  2.  By  reason  of  the  right  of  the  trus- 
tees to  an  indemnity  out  of  the  trust  property  for  money  expended 
by  them  in  its  preservation. 

By  stihrogation. — "3.  By  subrogation  to  the  rights  of  the  trustees 
of  some  person  who  may  have  advanced  money  at  their  request 
for  the  preservation  of  the  property. 

By  right  of  incumbrancers  to  preserve  security. — "4.  By  reason  of  the 
right  vested  in  mortgagees  or  other  persons  having  a  charge  upon 
the  policy  to  add  to  that  charge  any  moneys  which  have  been  paid 
by  tnem  to  preserve  the  policy." 

Example  of  lien  by  contract. — An  instance  of  the  first  class  of  cases, 
viz.,  the  creation  of  a  lien  by  contract  with  the  beneficial 
[*  352]  owner  *i8  to  be  found  in  the  case  of  Aylmn  v.  Witty  (b). 
where  Kindersley,  V.  C.,held  "that  where  a  mortgagor  had 
contracted  with  the  mortgagee  to  pay  the  premiums,  and  there 
were  sureties  for  the  performance  of  this  contract  by  the  mortgagor, 
and  the  sureties  had  oeen  called  upon  and  had  paid  the  premiums, 
the^  were  entitled  as  against  the  mortgagor  to  a  lien  upon  the 
policy-i  loneys.  It  is  obvious  that  in  this  case  the  sureties  were, 
by  contract  with  the  principal  debtor,  entitled  to  the  benefit  of  all 
the  securities  which  the  mortgagee  could   have  enforced,  and 

(a)  28  Ch.  D.  552,  52  L.  J.  Ch.  702,  48  L.  T.  N.  S.  664,  81  W.  R.  561,  con- 
firmed by  Falcke  v.  Hcottiah  Imperial,  84  Ch.  D.  284,  85  W.  R.  143. 

(6)  9  W.  R.  720,  80  L.  J.  Ch.  860. 

'  Premiums  voluntarily  paid  on  life  of  another  cannot,  in  abfience  of  any 
understanding,  be  recovered  of  the  beneficiary,  and  peraon  no  paying  hoii  no  lion 
for  Huch  payments  upon  the  proceeds  of  insurance  collected  by  him  as  agent  of 
auch  beneficiary.    Meier  v.  Meier,  88  Mo.  666. 

282 


LIEN. 


*353 


amongst  others  to  a  charge  for  the  premiums  paid.  Examples  of 
lien  by  virtue  of  trusteeship  and  by  subrogation. — The  seconil  nncT third 
classes  of  cases  are  well  illustrated  by  Clack  v  Holland  (c),  in  which 
it  was  held  that  trustees  who  paid  moneys  under  circumstances 
which  gave  them  no  right  to  a  charge  could  not  create  a  charge  in 
favour  of  a  third  person  from  whom  they  borrowed  moneys.  To 
the  same  class  may  be  referred  the  case  of  Gill  v.  Downing  (d),  in 
which  mortgages,  whose  title  as  such  was  good  after,  and  only  after, 
the  death  of  the  tenant  for  lifo,  were  held  entitled  to  a  lien  during 
the  subsistence  of  the  tenancy  for  life.  The  mortgagees  were  put 
l3y  subrogation  in  the  place  of  the  trustees.  Again,  in  the  case  of 
Todd  V.  Morehouse  (e)  the  right  of  trustees  to  create  a  lien  by  subro- 
gation of  their  rights  was  recognized,  and  it  was  determined  that 
a  person  paying  at  the  request  of  the  trustees  did  not  lose  the  right 
to  the  lien  simply  because  the  trustees  might  possibly  have  taken 
some  other  course  to  preserve  the  property."  His  lordship  con- 
tinued: "Such  appear  to  me  to  be  the  classes  of  cases  in  which  a 
lien  is  created  by  payment  of  premiums.  I  am  further  of  opinion 
that,  except  under  the  circumstances  to  which  I  have  referred,  no 
lien  is  created  by  the  payment  of  the  premiums  by  a  mere 
stranger  or  by  a  part  *owner.  Payment  of  premiums  by  mere  [*  353] 
stranger  gives  no  Um. — I  will  first  consider  the  case  of  pay- 
ments by  a  mere  stranger.  On  principle  it  is  difficult,  if  not  im- 
possible, to  see  why  such  paymc^nts,  which  when  made  without 
contract  or  request  are  a  mere  impertinence,  should  create  a  lien 
upon  the  property.  .  It  is  evident  that  in  themselves  they  would 
not  even  create  a  ground  of  personal  action  against  the  person 
eased  by  the  payment  of  moneys  by  A.  for  B.  gives  no  ground  of 
action  against  "B.,  unless  they  are  paid  on  his  request.  Further, 
the  law  relating  to  'confusion'  appears  strongly  to  show  that  no' 
Buch  right  would  exist.  If  I  pour  my  gold  into  your  heap,  or  put 
my  silver  into  your  melting-pot,  or  turn  my  corn  into  your, 
granary,  I  have  no  right  to  an  account  or  any  relief  against  you,, 
but,  on  the  contrary,  I  have  actuallv  transferred  the  property  in 
what  was  mine  to  the  person  with  whose  property  I  have  mingled 
it.  Again,  the  authorities  seem  to  me  to  be  very  clear  upon  this 
point.  In  the  case  of  Burridge  v.  Row  (/),  Knight  Bruce,  L  J., 
used  the  following  language : — '  Nothing  that  has  been  stated  to  nio 
has  had  the  effect  of  persuading  me  that  without  contract  for  that 

Eurpose  the  mere  fact  of  making  payments  of  the  premiums, 
owever  necessary  that  might  be  for  the  preservation  of  the 
property,  would  give  the  party  making  those  payments  a  title  to 
the  property.  A  mere  stranger  by  paying  the  premiums  on  a 
policy  cannot  acquire  a  lien  on  it.    He  can  only  acquire  a  lien  by 

(c)  19  Beav.  262,  2  W.  R.  402,  18  Jur.  1007,  24  L.  J.  Ch.  18. 
U)  17  B^q.  810,  80  L.  T.  N.  8  157,  23  W.  R.  800. 
(«)  I ..  R.  19  Eq.  09,  23  W.  R.  155,  82  L.  T.  N.  S.  8. 

(/)  Burndgt  v.  Bow,  1  Y.  dc  0.  Oh.  0.  188,  191,  688,  18  L.  J.  Gh.  178,  8 
Jur.  299. 

288 


m. 
m 


'  it  if 


355 


THE  LAWS  OF  INSURANCE. 


some  contract  with  the  persons  benefici.illy  interested  in  it,  or  yith 
tlie  trustee,  where  the  trustee  himself  might  have  obtained  a 
lien."'. 

Payment  of  premiums  by  part  owner  per  se  gives  no  lien. — The 
learned  Lord  Justice  Fry  further  said  in  the  same  case  (Leslie  v. 
French) — "With  regard  to  payments  inade  by  a  part  owner,  it 
appears  to  me  that  except  by  contract  such  payments  give  no  title 
to  the  person  making  them  against  the  other  part-owners 
[*  354]  of  the  *policy.  Payments  hy  mortgagor. — That  payments  by 
a  mortgagor  who  in  equity  is  part  owner  with  the  mortgagee 
create  no  lien  as  against  the  mortagee  was  determined  by  Romilly, 
M.R.  (flf).  By  tenant  for  Vfe. — And  generally  speaking,  it  is  clear 
that  money  laid  out  by  the  tenant  for  life  in  improvements  on  the 
estate  creates  no  lien  against  the  remainWar-man  (h).  Under 
voidable  assignment. — Again,  in  Pennell  v.  M^  ir  (i),  the  Master  of 
the  Rolls  had  to  deal  with  a  case  in  which  A.,  the  owner  of 
policies,  had  as  a  part  of  a  transaction  avoidable  for  fraud  assigned 
them  to  B.,  and  nad  covenanted  to  keep  them  up.  B.,  claiming 
under  the  assignment,  had  paid  premiums.  A.  instituted  a  suit  to 
set  aside  the  transaction  on  the  ground  of  fraud,  and  the  Master  of 
the  Rolls  decided  the  assignment  was  a  valid  security  for  the 
moneys  actually  advanced,  and  not  for  the  premiums  paid  by  B., 
which  was  a  voluntary  payment 

In  this  case  it  is  evident  that  until  the  transaction  was  avoided, 

A.  and  B.  both  had  interests  in  the  policies,  and  yet  the  payment 
by  one  of  the  persons  so  interested  was  held  to  create  no  lien  as 
against  the  other. 

Right  of  contribution  gives  no  lien. — ^The  law  of  contribution  does 
not  apply,  for  (1)  it  arises  only  between  persons  joined  for  a  com- 
mon purpose,  or  who  stand  in  the  position  of  tenants  in  common 
or  co-parceners. 

(2)  The  right  to  contribution  is  a  personal  right,  and  the  remedy 

personal,  and  there  is  no  lien  for   tne  amount  of  the 

[*  356]  moneys  in  respect  of  which  the  right  *ariBe8.    This  was 

decided  by  Lord  Eldon  in  ex  parte  Young  {k),  overruling 

Lord  Hardwicke. 

No  lien  on  policy  where  premiums  paid  by  tenant  for  life. — Where  the 
tenant  for  lite  under  a  settlement  of  a  residuary  estate,  which  com- 
prised an  annuity,  and  a  policy  on  the  life  for  which  the  annuity 
was  held,  paid  premiums  on  the  policy  which  the  trustees  had 

{)ower  to  retain  in  specie  and  keep  up,  she  was  decided  to  have  no 
ien  on  the  policy  for  such  payments,  since  the  policy  was  kept  up 

ig)  NorrU  v.  Caledonian  Ins.  Co.,  8  Eq.  127,  132,  20  L.  T.  N.  S.  989,  17  W. 

B.  954. 

(A)  Tenants  improving  under  the  Settlf>d  Lnnd  Act,  1882,  must  insure  for  the 
benefit  of  the  remainderman.  See  Waugh^a  Trusts,  46  L.  J .  Ch  629,  26  W. 
R.556. 

(i)  23  Beav.  172,  6  W.  R"  216,  29  L.  T.  86.  See  Dare;/  v.  Croft,  9  Ir.  Ch.  19 
(1858). 

{k)  2  V.  &  B.  242. 

284 


LIEN. 


*356 


for  the  benefit  of  the  estate  (/).  It  should  be  observed  that  the 
trustees  had  power  to  retain  enough  out  of  the  income  to  pay  the 
premiums  on  the  policy,  and  the  Court  considered  that  they  might 
be  taken  to  have  done  so,  which  would  only  have  diminished  the 
actual  income  of  the  tenant  for  life  equally  with  the  payments  she 
herself  made. 

Lien  upon  a  policy  may  arise  in  other  ways  than  by  payment  of 
premiums  under  the  circumstances  before  stated. 

lAeii  by  deposit  of  policy. — Although  mere  deposit  of  a  policy  upon 
an  advance  of  money,  without  notice  to  the  insurance  office  of  the 
deposit,  will  not  suffice  to  constitute  an  equitable  mortgage  of  the 
policy,  it  may  create  a  lien  thereupon,  if  such  be  the  intention  of 
the  parties,  even  though  not  a  word  passed  at  the  time  the  deposit 
was  made  (m). 

Farther  advances  covered. — ^And   an  equitable  charge   may  be 
created  by  mere  deposit,  accompanied  by  notice  to  the  office  (n), 
and  as  the  Couri  would  infer  from  that  deposit  that  the 
money  then  advanced  should  be  charged  as  if  there  was  *a  [*  356] 
written  agreement,  additional  advances  would  also  be  so 
charged  unless  a  contrary  intention  appeared  (o). 

iMfii  by  persona  commissioned  to  effect  a  policy. — Insurance  brokers 
have  a  general  lien  on  the  marine  policies  effected  by  them,  for 
the  general  balance  due  to  them  from  their  principals  (p\  This 
rule  applies  to  land  policies  when  effected  through  such  orokers, 
but  depends  on  the  custom  of  a  particular  calling.  Even  with 
them  no  lien  can  bo  claimed  if  the  policy  has  been  deposited  with 
them  for  a  special  purpose  (g).  If  one  broker  is  employed  by  an- 
other broker  to  effect  a  policy  for  that  other's  principal,  the  sub- 
agent  has  still  a  lien  on  the  policy  for  premiums  due  from  the 
broker  who  employed  him  (r). 

Solicitor's  lien. — A  solicitor  may  have  a  lien  on  a  policy  of  insur- 
ance for  his  costs.  Such  lien  is  only  a  passive  remedy,  giving;  no 
claim  to  the  fund  secured  by  the  policy,  but  merely  a  right  to  em- 
barrass the  person  who  claims  the  fund  by  the  non-production  of 
the  documents  of  title.  A  solicitor  is  not  bound  to  give  the  insur- 
ance office  any  notice  of  his  lien,  since  owing  to  the  nature  thereof 

(I)  Waugh's  Trusts,  46  L.  J.  Ch.  629,  25  W.  R.  556.  Browne  v.  Browne,  8 
W.  R.  726.     See  also  Money  v.  Gibhs,  1  Dr.  k  Wal.  (Ir.)  394. 

(m)  Gibson  v.  Overbury,  7  M  &  W.  655j  10  L.  J.  N.  S.  Ex.  219.  Chapman 
V.  Chapman,  18  Beav.  811,  distinguished  in  Maughan  v.  Ridley.  6  L.  T.  N.  S. 
809.  liummens  v.  Hare,  1  Ex  D.  169,  84  L.  T.  N.  S.  407,  24  W.  R.  886,  Green 
V.  Ingham,  L.  R.  2  G  P  525.    See  Conway  v.  Britannia,  8  Lr.  Can.  Jur.  162. 

(n)  Ex  parte  Kensington,  2  V.  &  B.  83,  per  Eldou,  G.  (1873).  Ferris  v. 
MuUins,  2  Sm.  &  Giff.  878,  18  Jur.  718. 

(o)  Ex  parte  Langstone,  17  Ves.  227,per  Eldon,  C.  (1810).  See  Ellis  v. 
Kreutzinger,  27  Missouri  811.     Talbot  v.  Ft-ers,  9  Gh.  D.  668,  872,  27  W.  R.  148. 

(p)  See  Cross  on  Lien,  and  cases  there  cited,  277,  899.  Castling  v.  Aubert,  2 
East  825  (1802). 

(q)  Muir  V.  Fleming,  1  Dowl.  &  Ry.  N.  P.  29. 

lr)  Dixon  v.  Stansfield,  10  G.  B.  898.  Fisher  v.  Smith,  4  App.  Gas.  1,  48  L. 
J.  Q.  B.  411, 89  L.  T.  N.  S.  480,  27  W.  R.  118. 

285 


•(■'ii 


*357 


THE  LAWS  OF  INSURANCE. 


he  would  not  by  such  notice  convert  the  insurers  into  trustees  for 
him,  and  failure  to  give  such  notice  is  in  no  way  such  negligence 
as  to  deprive  him  of  his  lien  (s).  He  cannot  be  made  to  part  with 
the  policy  till  he  is  paid,  except  upon  terms  (Z),  such  as 
[*  357]  payment  mto  court  of  the  policy  moneys,  or  preservation  *of 
the  lien  by  the  insurers.  But  it  is  doubtful  whether  such 
a  lien  could  be  enforced  by  suit  at  all  (w). 

Right  to  stop  in  transitu  gives  no  right  to  insurance. — Lien  in 
vendor  and  right  to  stop  in  transitu  do  not  entitle  the  vendor  to  the 
proceeds  of  policies  effected  by  the  purchaser  on  the  goods 
sold  (x). 

Vendor*s  lien  subrogated  to  insurers. — When  an  unpaid  vendor 
who  is  insured  recovers  from  the  insurers,  the  insurers  are  entitled 
to  his  lien  as  against  the  purchaser,  and  if  the  vendor  recover  from 
the  purchaser  too,  he  must  refund  the  insurance  (y). 

LiM  created  by  deposit  by  person  out  of  jurisdiction  with  one 
within. — Where  a  policy  granted  to  a  person  domiciled  outside  the 
jurisdiction  is  deposited  with  a  person  within  the  jurisdiction  to 
answer  a  debt  by  a  contract  made  within  the  jurisdiction,  a  lien 
thereon  will  be  acquired  by  the  depositee,  and  will  not  be  affected 
by  the  bankruptcy  in  his  own  domicile  of  the  depositor  (z). 

Creditor  having  two  debts  secured  by  policy  surety  of  one  debt  cannot 
claim  the  policy  after  payment.  Lien  drops  with  policy. — Where  a 
creditor  has  his  debt  secured  by  a  policy  and  guaranteed  by  a 
surety,  and  also  has  a  lien  on  the  policy  for  another  debt,  the 
surety  is  not  entitled  to  the  policy  on  paying  the  debt,  but  his 
rights  are  subject  to  the  lien  (a). 

When  a  policy  drops,  the  lien  drops  with  it  (6). 

Iden  by  mo'tgagor  paying  premiums. — If  a  mortgagor  after  bank- 
ruptcy pays  premiums  to  keep  up  a  mortgaged  policy,  he  is  not 
entitled,  in  the  absence  of  special  agreement,  to  a  hen  on  the  policy 
for  the  amount  so  paid  (c). 

(«)  West  of  England  v  Batchelor,  80  W.  R.  864,  51  L.  J.  Ch.  199.  46  L.  T. 
N.  S.  132.  Felly  v.  Wathen,  1  De  G.  M.  &  G.  16.  Richards  v.  Platel,  Craig  & 
Ph.  79.  Steadman  v.  Webb,  8  My.  &  Cr.  846  See  Dearie  v.  Hall,  3  Rusb.  1, 
for  rules  as  to  priority  in  regard  to  choses  in  action. 

(t)  Richards  v.  Platel,  Cr.  k  Ph.  79  at  84,  per  Cottenham,  C.  Limerick  Co.  v. 
GTerrall,  1  Ir  Jur.  98. 

(u)  Stedman  v.  Webb,  4  My.  &  Cr.  846,  per  Cottenham,  C  (1889). 

(«)  Berndton  v.  Strang,  i  Ch.  App.  688  16  W.  R.  ^026,  per  Cairns,  C.(1868), 
distinguishing  Worrall  v.  Johnson,  2  Jac-  &,  W.  214. 

(y)  Castelhin  v  Preston,  11  Q.  B.  D.  880,  52,  L.  J  Q.  B.  866,  49  L.  T.  N.  S. 
29,  81  W.  R.  557,  per  Bowen,  L.  J. 

(as)  Le  Fenvre  v.  Sulliean,  10  Moore  P.  C  1. 

(a)  Fairbrother  v.  Woodhome'29  L.  T.  94,  5  W.  R.  12,  28  Beav.  18,  26  L.  J. 
Ch.  81.    duty's  Policy,  20  W.  R.  857. 

(6)  Busteed  v.  Western  England,  5  Ir.  Ch.  558.  Norria  v.  Caledonian  Ins. 
Cb ,  8  Eq.  182.  20  L.  T.  N.  8.  9  0,  17  W.  R.  954. 

(r)  Saunders  v.  Dunman,  7  Ch.  D.  825,  47  L.  J.  Ch.  888,  88  L.  T.  N.  S.  416, 
26  W.  R  897.  Falcke  v.  Scottish  Imperial,  84  Ch.  D.  284.  These  cases 
explain  Shearman  v.  British  Empire  Mutual,  L.  R.  14  Eq.  4,  41  L  J.  Ch.  406, 
2(1  L.  T.  N.  a  570,  20  W.  R  620. 

2S0 


CONFLICTING  CLAIMS, 


*359 


♦CHAPTER  XIX. 


CONFLICTING  CLAIMS. 


[*3581 


i  .';';■«'>' 


When  company  should  interplead  and  not  pay  into  court,  under 
10  &  11  Vict.  c.  56.— When  cor.flicting  claims  are  made  on  an 
insurance  company  in  respect  of  a  policy,  the  proper  procedure  is 
to  interplead  Co),  and  not  to  pay  into  court  under  the  Trustees' 
Relief  Act  (6),  the  insurers  not  being  trustees  or  stakeholders,  but 
debtors. 

The  practice  of  paying  into  court  under  that  Act  had  been  often 
used  (c),  until  Jessei,  M.R.,  pointed  out  that  unless  the  policy  was 
a  trust  policy  the  Act  did  not  apply. 

The  insurers  cannot  interplead  if  they  have  any  adverse  claim 
in  respect  of  the  subject-matter  (d).  In  Ireland  it  has  been  held 
that  they  cannot  interplead  if  one  claimant  offers  a  sufficient 
indemnity,  and  that  if  he  offers  indemnity  and  they  are  not  satis- 
fied, they  should  pay  into  court  under  the  Trustees'  Relief  Act  («). 

When  an  action  is  commenced  by  a  claimant  on  a  policy,  if  it  is 
not  so  framed  as  to  bring  the  other  claimants  before  the  Court,  the 
insurers  may  interplead,  and  have  the  first  action  stayed  (/). 

An  offer  should  be  made  to  pay  interest  on  the  policy 
moneys  (gr),  since  a  policy  bears  interest  under  *3  &  4  Wm.  [  *359] 
IV.  c.  42,  s.  28  (Ji\  for  it  would  seem  that  submission  to  pay 
the  moneys  to  the  persons  found  to  be  entitled  will  not  remove  the 
obligation  to  pay  interest  even  if  conflicting  claims  through  no  fault 
of  the  insurers  delay  such  payment  (t)i  unless  any  arrangement 
has  been  come  to  that  the  money  should  not  be  invested  or  brought 
into  court  {k). 

Payment  under  decree  indemnifies  company. — If  the  insurance  com- 

(o)  See  Prudential  v.  Thomas,  8  Ch.  App.  74,  87  L.  J.  C.  H.  202,  16  W. 
R  470. 

(6  Haycock's  Policy,  1  Ch.  D.  611,  45  L.  J.  Ch.  247,  24  W.  R.  291,  disap- 
proving  the  United  Kingdom  Life.  84  Beav.  493,  18  W.  R.  645. 

(c)  Chapman  v.  Barnard,  17  W.  R.  859.  Webb's  Policy,  2  Eq.  456,  15  W. 
R.  529.     Cobb's  Policu,  15  W.  R.  29. 

(d)  Bignold  v.  Audland,  11  Sim.  28,  80  (1840),  per  ShadwelL  V.  C. 

(e)  Chapman  v.  Besnard,  17  W.  R.  859  (1869),  per  Lord  O'Hagan. 
(/)  Prudential  Co.  v.  Thomas,  sxipra. 

iff)  Bignold  v.  Audland,  mpra. 
A)  Bushnan  v.  Morgan,  6  Sim.  686  (1838). 
i)  French  v.  Royal  Exchange  Co  ,  6  Ir.  Ch.  628 
(k)  Same  case  oa  appeal,  7  Ir.  Ch.  623  (1868). 

287 


uw. 


m-m 


t*!i-U 


*359 


THE  LAWS  OF  INSURANCE. 


any  pay  under  decree  moneys  payable  under  a  lost  policy,  such 

ecree  is  sufficient  indemnity  (I). 

Payment  to  trustees  good. — The  insurance  can  safely  pay  a  trustee 
of  a  policy  even  if  under  the  trust  he  has  no  express  power  to  give 
receipts  (m). 

Can  policy  be  taken  in  execution  f — ^Thc  authorities  conflict  as  to 
whether  a  policy  can  be  taken  in  execution  under  a  Ji.  fa.  In  Ire- 
land  it  has  been  held  that  p  policy  of  life  insurance  is  not  such  a 
security  for  money  as  can  be  taken  by  the  sheriff  (n).  In  England 
the  contrary  has  been  held  (.0) ;  but  the  Irish  case  was  not  cited  to 
the  Court,  and  in  the  latest  case  in  Ireland  (p),  the  Court  fully  dis- 
cussed both  authorities,  and  followed  the  previous  Irish  decision. 
Canadian  policies  usually  provide  that  a  fire  insurance  ehaJl  cease 
on  the  property  being  taken  in  execution. 

(?)  England  v.  Tredegar,  1  Eq  344,  85  Beav.  256,  35  L.  J.  Ch.  386,  following 
Crokatt  v.  Ford,  25  L.  J.  Ch.  552,  4  W.  R.  426,  2  Jur.  N.  S.  436,  in  preference 
to  Bushnan  v.  Morgan^  supra. 

im)  Fernie  v.  Maguire,  6  Ir.  Eq.  137.     Ford  v.  Eyan,  4  Ir.  Ch.  842. 
n)  Alleyne  v.  Darcey,  5  Ir.  Ch.  56  (1855>. 
0)  Stokoe  T.  Covjan^  29  Beav.  687,  80  L.  J.  Ch.  882,  4  L.  T.  N.  S.  696,  0  W. 
B.  801. 
(j>)  Sargeant'a  v.  Trusts,  7  L.  B.  Ir.  66> 


COMPANIES. 


*361 


♦CHAPTER  XX. 


[*360] 


COMPANIES. 

What  depends  on  manner  of  company^s  constitution. — The  mode  in 
which  an  insurance  company  is  constituted  determines  the  manner 
in  which  it  shall  sue  and  be  sued,  and  the  character  of  the  liability 
of  its  members.  But  whenever  be  the  means  by  which  such  com- 
pany is  constituted,  its  powers  and  liabilities,  and  the  method  of 
Its  management,  are  peculiar  to  itself,  and  are  determined  by  the  par- 
ticular provisions  of  the  statute,  charter,  or  other  instruments  under 
which  tne  company  is  created.  These  provisions  are  important  to 
shareholders,  policy-holders,  and  all  other  persons  having  dealings 
with  the  company ;  because  by  the  registration  now  necessary  under 
the  Companies  Act,  1862,  all  persons  are  deemed  to  have  notice  of 
tiiem. 

Classification. — Insurance  offices  may  be  classified  irrespectively 
of  the  manner  or  nature  of  their  constitution  as  follows: — 

Proprietary. — 1.  Proprietary  offices  which  are  joint-stock  partner- 
ships, with  a  subscribed  or  guaranteed  capital,  tlie  partners  where- 
in absorb  the  whole  profits  of  the  undertaking. 

Mixed,  in  which  policy-holders  share  profits. — 2.  Offices  set  up  for 
profit  to  the  shareholders,  but  which  also  give  the  policy-holders 
certain  advantages  in  the  way  of  a  share  of  the  profits,  usually 
culled  a  bonus  or  n  periodical  rebate  in  the  amount  of  their  pre- 
miums; but  they  do  not  admit  the  policy-holders  as  partners,  nor 
render  them  liable  has  such. 

These  mixed  companies  arethemostcommon;  in  fact  the 
late  Lord  Justice  James  said :  "  Every  life  assurance  ^society  [*  361] 
is  substantially  and  materially  a  mutual  life  assurance 
society.  The  method  by  which  it  is  intended  to  provide  for  the 
pjiyment  of  the  sums  secured  by  the  policies  is  by  invjsting  the 
premiums  and  accumulating  the  money  so  as  to  form  n  fund  out 
of  which  the  claims  are  ultimately  to  be  satisfied.  The  capital  of 
the  shareholders  and  the  sums  which  the  shareholders  undtrtakc 
and  make  themselves  liable  to  pay,  are  in  truth  only  a  guarantee 
against  the  possible  contingency  of  the  accumulated  insurance 
fund  being  found  insufficient"  (a). 

Muttial. — 3.  Offices  established  for  mutual  insurance,  where  the 
policy-holders  are  themselves  the  proprietors,  and  where  the  prin 
cipal  object   of   the    society    is    ra'her    the    protection  of   iti 
members  against  loss  than  the  acquisition  of  j>rofit.    ''^         ^^  ~" 


its 
It  was  there- 


(a)  Gramn  Cane,  1  Ch.  D.  821,  46  L.  J.  Ch.  321,  .W  L.  T.  N.  S.  70G. 
19  PORTER  ON  INSURANCE.  289 


■'ill 


*363 


THE  LAWS  OF  INSUBANCH. 


fore  doubted  whether  such  an  association  required  registration 
under  the  Joint  Slock  Companies  Act,  1862,  but  the  necessity  for 
registration  has  since  been  judicially  determined  (b). 
•Friendly  societies  are  also  for  the  purpose  of  mutual  insurance. 
They  require  registration  under  the  Friendly  Societies  Act,  1875. 

Qympanies  under  special  statute. — 4.  Ofl&ces  set  up  by  the  State  to 
encourage  providence  and  thrift,  such  as  the  Government  Insur- 
ance and  Annuity  Department,  and  the  special  modes  of  insurance 
provided  by  Acts  of  Parliament  for  departments  of  the  Civil  Ser-, 
vice,  and  in  India  (c). 

Kind  of  cmnpanies. — Except  those  risks  that  are  taken  by  under- 
writers ut  Lloyd's,  the  whole  of  the  insurance  business  other  than 
marine  is  carried  on  by  companies,  most,  though  not  all,  oi' 
[*  362]  which  are  incorporated.  The  continuousness  *of  corporate 
existence  is  favourable  to  the  assured  (d),  and  the  business 
itself  being  reducible  to  a  routine  and  system,  is  especially  suitable 
for  a  joint-stock  partnership  (e). 

The  various  companies  which  carry  on  insurance  business  have 
been  constituted  in  different  ways,  and  the  form  and  mode  of  their 
constitution  is  still  to  some  extent  important  as  determining — (1) 
the  rights  inter  se  of  the  joint  stock  or  shareholders,  (2)  the  powers 
and  mode  of  contracting  given  and  prescribed  to  the  company,  (3) 
the  extent  of  the  shareholders'  liability  on  the  contracts  made, 
(4)  the  manner  of  suing  thereon,  (5)  the  means  of  enforcing 
judgment  thereon. 

Formation  of  companies. — The  modes  in  which  existing  insurance 
companies  have  been  formed  are — 

A.  By  deed  of  settlement. 

^.  By  royal  chapter. 

c.  By  special  statute. 

D.  By  letters  patent. 

E.  Under  the  various  Companies  Acts. 
These  different  modes  of  creation  produced — 

(1)  Mere  common-law  partnerships. 

(2)  Corporations. 

(3)  Quasi  corporations,  suing  by  and  being  sued  in  the  name  of 

one  of  their  members  (/)  or  a  registered  public  ofl&cer. 
[*  363]     *(4)  Joint-stock  companies  registered  and  incorporated 
under  the  Companies  Acts. 

(b)  lie  Padstow  Total  Loss  Association,  20  Ch.  D.  137,  51  L.  J.  Ch.  344,  45 
L.  T.  N.  S.  774,  30  W.  R.  326. 

(c)  Boldero  v.  H.  E.  /.  C,  II  H  L.  C.  405.  Undenoood's  Case,  4  L  R.  4  H. 
L.  680.  Edwards  v.  Warden,  1  App.  Cas.  281,  9  Ch.  App.  496.  Robertson's 
Case,  12  Moore  P  C  4000.  Davies  v.  Trustees  of  Madras  Fund,  12  Mooro  P. 
C.  403  n.,  7  Moore  Iiid  App.  364  n. 

(d)  Sec  Adam  Smith's  Wealth  of  Nations,  p.  840,  edn.  by  M'GuUocb,  bk. 
y.  c.  1,  a.  1. 

(e)  2  Stephen  Comm.  126  (8th  ed.).  > 
(/)  7  Wm.  IV.  &  1  Vict  c.  78,  8.  8. 

290 


(0 


COMPANIES. 


364 


The  first  charters  granted  to  insurance  companies  were  given  un- 
der permission  by  statute. 

These  charters  were  in  the  nature  of  monopolies,  whence  the 
need  to  apply  to  Parliament  for  authority  to  grant  tliem. 

Few  charters  seem  to  have  been  granted  to  any  insurance  com- 
pany by  the  Crown  independently  of  Pa^-liament  {g). 

Royal  Exchange  and  London  Assurance. — By  6  Geo.  I.  c.  18,  Par- 
liament empowered  the  King  to  grant  two  charters,  constituting 
two  marine  insurance  corporations,  viz,,  the  Roy.il  Exchange  and 
the  London  Assurance  (h),  and  forbidding  all  other  corporations 
for  marine  insurance.  The  purpose  of  thin  Act  was  to  create  two 
Eolvent  insurance  companies,  to  suppress  all  bubble  companies  and 
bodies  presuming  to  act  as  corporate  bodie-  without  legal  author- 
ity, ara  to  give  the  two  companies  a  monopoly  ot  infc>urance  as  a 
business  for  corporate  bodies  {i). 

■  ConstitxUion  of  companies. — The  corporations  remain,  but  their 
monopoly  has  been  removed  ( j),  while,  on  the  other  hand,  they 
have  been  permitted  to  insure  over  a  wider  area  and  against  more 
risks  than  those  contemplated  by  the  original  charter. 

Special  statutes. — Special  statutes  under  which  certain  insurance 
associations  are  formed  have  the  effect  of  charters,  and  clotlve  such 
companies  with  all  the  attributes  of  corporations.  But  most  of  the 
special  Acts  appear  to  do  little  more  than  provide  for  the  mode  of 
suing  and  being  sued. 

Very  few  insurance  societies  have  actually  been  *formed  [*  364] 
by  a  private  Act;  but  many  societies  already  existing,  but 
unincorporate,  have  found  it  advantageous  to  apply  for  and  to  ob- 
tain incorporation,  more  especially  those  'domiciled  in  Scotland. 

Letters  Patent  Act. — By  the  Letters  Patent  Act  {k)  the  Crown  is 
empowered,  on  the  application  of  any  company  formed  by  deed  of 
partnership,  to  grant  to  such  a  company  letters  patent,  authorizing 
it  to  sue  and  be  sued  by  an  officer  named  for  the  purpose,  and  by 
such  letters  patent  to  limit  the  liability. of  the  members  of  the 
company. 

The  company,  on  obtaining  this  privilege,  comes  under  certain 
regulations  as  to  the  registration  of  various  particulars  connected 
with  its  constitution  and  other  matters  pointed  out  in  the  Act. 

This  Act  is  not  compulsory  but  permissive,  granting  a  privilege 
to  those  who  choose  to  apply  for  it.  It  is  still  in  force,  but  applies 
only  to  companies  formed  before  September  8,  1844,  when  the 
Joint-Stock  Companies  Act  was  passed  {I). 

Object  of  JoirU'Stock  Companies  Act. — "  The  leading  purpose  of  the 

(or)  Clifford  on  PriTate  Bill  Legislation,  vol.  2,  p.  693. 
(h)  S.  12. 

(i)  S.  18.     As  to  the  history  of  this  Act  and  6  Geo.  IV.  c.  87,  see  Clifford  on 
Private  Bill  Legislation,  vol.  2,  p.  670. 
(j)  5  Geo.  IV.  c.  114. 
(k)  7  Wm.  IV.  &  1  Vict.  c.  72. 
(l)  Taylor  on  Joint  Stock  Companies  p.  910  (1847). 

291 


m 


36G 


THE  LAWS  OF  INSURANCE. 


first  Joint-Stock  Companies  Act  (m)  was  wO  enable  a  permanent 
company,  consisting  of  changing  shareholders,  to  make  binding 
contracts,  and  sue  and  be  sued,  and  do  uU  the  acts  necessary  fur 
carrying  on  a  trade.  The  preamble  expresses  an  intention  to  invest 
them  with  the  qualities  and  incidents  of  corporations  with  soniu 
modifications  and  subject  to  someprovisions  and  regulations"  (n). 

7  &  8  Vict.  c.  110,  8.  2  (1844). — Every  assurance  company  or  as- 
Bociation  for  the  purpose  of  assurance  or  insurance  upon  lives,  or 
ugainst  any  contingency  involving  the  duration  of  human  life,  or 
against  the  risk  of  loss  or  damage  by  fire  or  by  storm  or 
[*  365]  other  casualty,  or  for  granting  or  purchasing  *annuities  on 
lives,  and  every  institution  enrolled  under  any  of  the  Acts 
of  Parliament  relating  to  friendly  societies,  which  institutions  shall 
make  assurances  on  lives,  or  against  any  contingency  involving  the 
duration  of  human  life  to  an  extent  upon  one  life,  or  for  any  one 
person  to  an  amount  exceeding  £200,  whether  such  companies,  so- 
cieties, or  institutions  shall  be  joint-stock  companies  or  mutual  as- 
surance societies  or  both,  was,  if  established  after  the  commence- 
ment of  7  &  8  Vict.  c.  110,  s.  2,  bound  to  register  thereunder. 

Quasi  corporatiom. — Insurance  companies  registered  under  7  <fe  8 
Vict.  c.  110,  partake  of  corporate  powers  with  several  incidents  of 
partnership,  and  have  been  termed  outm  corporations  (_o).  fiutthe 
privileges  of  the  statute  are  accorded  only  to  those  registered  under 
the  statute;  and  if  registration  be  made  as  a  company,  they  cannot 
afterwards  register  so  as  to  lead  the  world  to  suppose  them  a  cor- 
poration (p). 

Company  under  7  &  8  Vict.  c.  110. — A  company  formed  and  duly 
registered  under  the  first  Joint  Stock  Companies  Act  (7  &  8  Vict.  c. 
110)  for  the  purpose  of  insurance,  and  also  for  the  grunting  of  en- 
dowments, annuities,  assurances  during  sickness,  and  loans,  is  an 
insurance  company  within  20  &  21  Vict.  c.  14,  s.  27,  and  can  sue 
without  being  registered  under  the  Joint-Stock  Companies  Acts, 
1856-57  (7). 

Companies  excepted  from.  Act. — Certain  insurance  companies  were 
excepted  Irom  tlie  first  Joint-Stock  Companies  Act — (1;  In  respect 
of  the  time  of  their  formation,  if  their  formation  was  begun  before 
Sept.  5, 1844,  they  could  not  be  completely  registered  or 
[*  366]  brought  (s.  59)  within  the  Act(r);  *(2)  If  incorporated  by 
charter  or  Act  of  Parliament;  or  (3)  If  authorized  by  letters 
patent  or  statute  to  sue  and  be  sued.    And  companies  formed  after 


t 


(m)  7&8  Vict.  Clio. 

(»)  l^ince  of  Wales  Lis.  Co.  v.  Harding,  E.  B.  &  E.  183,  217,  27  L.  J.  Q.  B. 
297,  4Jur.  N.  8.851. 

(w)  Ridley  v.  Plymouth  Co.,  2  Ex.  711,  per  Parko,  B.  Bricc's  Ultru  Vires, 
p.  12. 

{p)  Keg.  V.  Whitmarsh,  10  L.  J.  Q.  B.  185. 

iq)  Ijondon  and  Provindal  Proeident  Sodett/  v.  Aahton,  12  C  B.  N.  S.  70!>, 
728,  11  W.  11.  152,  7  L.  T.  N  S  !150.    Seo  also  26  &  20  Vict.  c.  89,  s.  8. 

(r)  Taylor  on  Joint-Stock  Companies,  US. 

292 


COMPANIES. 


367 


the  Act  could,  though  within  the  definition  of  a  company  therein 
avoid  the  need  of  registering  thereunder  by  obtaining  a  charter, 
private  Act,  or  letters  p  itent. 

In  consequence  of  ttiis  exclusion  of  assurance  companies,  many 
have  since  iiad  to  go  to  Parliament  for  private  Acts. 

Companies  registered  under  7  &  8  Vict.  c.  110,  must  re-register. — The 
Companies  Act,  1862,  enforces  registration  on  those  cdmpanies 
which  have  been  registered  under  the  older  Act  7  &  8  Vict.  c.  110 
(g),  and  the  effect  of  such  registration  is  exactly  the  same  as  if  the 
company  had  been  formed  and  voluntarily  registered  under  the 
later  Act  (0- 

What  companies  must  register  under  Companies  Act,  1862. — Every 
insurance  company  formed  since  Nov.  2, 1872,  must  be  registered 
under  the  Act  of  1862  («). 

Companies  which  ought  to  have,  but  have  not  registered  as  re- 
quired, are  under  the  disabilities  of  s.  210,  and  cannot  sue  at  law  or 
in  equity,  nor  even  present  a  petition  for  their  own  winding  up  (a;). 

Broadly  speaking,  by  the  Companies  Act,  1862,  h.  22,  Legislature 
intended  that  all  commercial  undertakings  consisting  of  more  than 
ten  persons,  started  after  the  commencement  of  that  Act,  should  be 
registered.  And  mutual  insurance  associations,  providing  that  the 
liability  should  be  several  only,  are  commercial  undertak- 
ings for  the  acquisition  of  gain  *withinthe  Act,  and  must  be  [*  367] 
registered  under  it ;  and  if  not  so  registered  are  illegal  asso- 
ciations, and  cannot  be  wound  tip  s.  199  of  the  Act  {y). 

Deeds  of  settlement  open  to  inspection. — All  companies  registered 
under  the  Companies  Acts,  1862,  deposit  with  the  registrar  copies 
of  their  deeds  of  settleoient,  and  thereby  the  same  are  made  avail- 
able for  public  inspection.  An  insurance  company  s  >  registered  is 
entitled  to  an  injunction  to  restrain  another  insurance  company 
from  using  its  registered  name  calculated  to  cause  the  one  company 
to  be  mistaken  for  the  other  (z). 

All  companies  not  so  registered  are  bound  to  print  their  deeds  of 
settlement,  and  to  supply  them  on  demand  to  every  shareholder 
or  policy-holder  for  not  more  than  2s.  6d.  (a). 

Effect  of  registration. — The  effect  of  the  compulsory  registration 


(«)  26  &'  26  Vict.  c.  89.  s.  209. 

(t)  Ramsay's  Case.  3  Ci.  D.  388,  4G  L.  J.  Ch.  411, 85  L.  T.  L  S.  054,  25  W.  R. 
279. 

(tt)  25  k  20  Vict.  c.  80,  b.  4.  E.\  parte  Harqruve,  10  Cli.  App.  M't  n.  Ro 
Padstow  Association,  20  Cb.  D.  137.  51  L.  J.  Ch.  344,  45  L.  T.  N.  S.  774,  30  W. 
R.  826. 

(x)  Re  Waterlio  Life  Co.,  41  lieav.  586,  32  L.  J.  Ch.  370,  11  W.  R  134,  7  L. 
T.  N.  8.  459,  9  Jur.  N.  S.  291.  Etmis  v  Hooper,  1  Q.  IJ  D.  45,  33  L.  T.  N.  S. 
b74,  24  W.  It,  226. 

(y)  Cory  and  Hawkslei/s  Case,  3  Ch.  I).  522,  32  L.  T.  N.  S.  525,  23  W.  R. 
030,  per  Jessel,  MR. 

(z)  Accidental  Insurance  Co.  v.  Accident,  Disease,  and  General  Insurance 
Corporation,  54  L.  J.  Ch.  104,  51  L.  T.  597. 

(a)  aa&84  Vict.  c.Ol. 

293 


i;r:;i 


i    V.} 


t 


I. 


*i. 


*368 


THE   LAWS  OP  INSURANCE. 


aforesaid  is  to  put  the  insurance  company  so  registering  within  all 
the  rules  and  regulations  of  the  Act  of  1862. 

What  is  an  insurance  company  under  Companies  Act. — For  the  pur- 
pose of  that  Act,  any  company  which  is  not  concerned  solely  in 
the  business  of  insurance,  but  carries  on  thercM  ith  any  other  \>m\- 
ness  or  businesess,  is  deemed  an  insurance  company  (6). 

What  is  an  unregistered  company. — Any  company  registered  under 
other  Acts  antecedently  to  the  passing  of  the  Act  of  1862,  id  an 
unregistered  company  withing  e.  199  of  that  Act.  In  Bowes  v.  The 
Hope  Life  Insurance  Company  (c),  the  Act  was  apptied  to  a 
company  formed  in  1852,  and  registered  under  the  Act  of  1844 
(7  &  8  Vict.  c.  110),  but  which  had  ceased  to  carry  on  business 

inJS55. 
[*  368]      *  Difference  between  corporate  and  incmporate  companies  im- 
material.— The  distinction  between  corporation  and  incor- 
poration seems  now  immaterial  (d). 

Reason  for  incorporating  by  statute,  per  Lord  Wensleydaie. — "It  is 
obvious,"  (says  Lord  Wensleydale)  "  that  the  law  as  to  ordinary 
partnership  would  be  inapplicable  to  a  company  consisting  of  a 
great  number  of  individuals  contributing  small  sums  to  the  com- 
mon stock,  in  which  case,  to  allow  each  one  to  bind  the  other  by 
any  contract  which  he  thought  fit  to  enter  into,  even  within  the 
scope  of  the  partnership  business  (/),  would  soon  lead  to  the  utter 
ruin  of  the  contributories.  On  the  other  hand,  the  Crown  would 
not  bo  likely  to  give  them  a  charter  which  would  leave  the  corpo- 
rate the  only  fund  to  satisfy  the  creditors.  Thg  Legislature  then 
devised  the  plan  of  incorporating  these  companies  in  a  manner 
unknown  to  the  common  law,  with  special  powers  of  management 
and  liabilities,  providing  at  the  same  time  that  all  the  world  should 
have  notice  who  were  the  persons  authorized  to  bind  all  the  share-, 
holders  by  requiring  the  co-partnership  deed  (of  settlement  or 
articles  of  association)  to  be  registered  (g)  and  made  accessible  to 
all,  and  besides  including  some  clauses  as  to  the  management.  All 
persons  have  notice  of  contents  of  deed  and  Acts. — All  i)ersons  must, 
therefore,  take  notice  of  the  deed  and  the  provisions  of  the  Compa- 
nies Acts  in  force  for  the  time  being.  If  they  do  not  choose  to 
acquaint  themselves  with  the  powers  of  the  directors,  it  is  their 
own  fault,  and  if  they  give  credit  to  any  unauthorized  persons, 
they  must  be  contented  to  look  to  them  only,  and  not  to  the  com- 
pany at  large.  Directors''  acts  ultra  vires  not  binding. — The  stipula- 
tions of  the  articles  of  asssociation  or  the  deed  of  hettlement  which 
restrict  and  regulate  their  authority  are  obligatory  upon  those  who 

(6)  Seo  H.  3. 

(c)  11  H.  L.  C.  S89. 

(d)  Per  Cotton,  L.J.,  in  Ashworth  v.  Munn,  15  Ch.  D.  803,  875,  28  W.  R. 
805,  50  L  J.  Ch.  107.     Mi/em  v.  Perigal,  2  Do  O  M.  &  G.  5»!). 

(/)  Ernest  v.  Mcholla,  0  H.  L.  C.  401,  per  Lord  WtMisloydule.      Balfour  r. 
Ement,  5  C.  H.  N.  8.  001,  28  I,.  J.  C.  P.  170. 

{g)  Companies  Act,  1802. 

294 


W. 


COMPANIES. 


*370 


deal  with  the  company,  and  directors  can  make  make  no 
contract  *80  as  to  bind  the  whole  body  of  shareholders,  [*  369] 
for  whose  protection  the  rules  are  made,  unless  they  arc 
Btrictly  complied  with.  The  contract  binds  the  person  making  it, 
but  no  one  else.  Discretionary  powers  of  directors. — Those  provisions 
which  give  to  the  directors  discretionary  powers  of  marngement 
do  not  affect  strangers,  and  the  shareholders  are  bound  by  the  ex- 
ercise of  the  discretion  which  they  have  consented  to  give.  Effect 
of  directory  conditions.— Other  stipulations  are  directory  merely,  and 
do  not  constitute  conditions  to  the  exercise  of  the  powers,  but  they 
may  form  the  subject  of  an  action  by  the  shareholders  against  the 
directors  for  their  breach  of  covenants  expressed  or  implied  in  the 
deed." 

The  doctrine  as  above  laid  down  by  Lord  Wensleydale  (h)  has 
been  steadily  followed,  but  with  a  tendency  to  treat  matters  as  di- 
rectory which  Lord  Wensleydale  would  probably  have  considered 
essential. 

Informal  affixing  of  company^s  seal  by  director. — Thus  in  Prince  of 
Watts  Assurance  Company  v.  Harding  (i),  where  a  policy  was  made, 
sealed,  and  executed  by  three  directors,  as  required  by  the  deed  of 
settlement,  but  without  an  order  for  the  affixing  of  the  common 
seal,  and  was  signed  by  three  directors  and  the  manager,  as  also 
required,  the  Court  of  Queen's  Bench  held  that  the  simple  omission 
of  such  a  formality  did  not  annul  the  instrument,  the  provision 
being  merely  directory.  What  provisions  directory. — And  generally 
all  formalities  which  relate  merely  to  the  internal  arrangements  of 
the  insurance  company  will  be  deemed  directory  (/t). 

And  on  this  principle  a  policy  issued  by  persons  purporting  to 
be  directors  has  been  neld  oinding  when  the  real  directors  could 
have  obtained,  but  did  not  seek,  an  injunction  against  the  ostensi- 
ble directors  (/). 

^Powers  to  grant  policies.  Invest  premiums. — The  chief  [*•-  370] 
powers  taken  by  an  insurance  company  are — (1)  to  grant 
policies,  &c.,  against  particular  risks,  and  accept  premiums  there- 
for, (2)  to  invest  the  premiums  so  received  in  iianner  most  profila- 
ble  to  the  company  and  compatible  with  their  obligations  as  in- 
surers. The  other  powers  taken  are  merely  incidental  thereto, 
and  if  not  contained  in  the  deed  of  settlement  may  often  be  im- 
plied therefrom. 

Company^a  business  must  conform,  to  its  constitution. — Companies 
must  confine  themselves  to  business  in  accordance  with  their  dc- 


I 


h)  Ernest  v.  Nicholls.d  H.  L.  C.  401. 

i)  E.  B.  &  E.  183,  27  L.  J.  Q.  B.  297,  4  Jiir.  N.  S.  851. 


8eo  Ro  Athenanm,  Ex  purlo  Eagle  Co.,  4  K.  &  J.  G49,  27  L.  J.  Ch.  829, 
0  \V.  It.  779  Gordon  v  Sea  Fire  Co.,  1  H.  &  N.  599,  Si6  L.  J.  Ex.  202. 
Ihaumtein  v.  Accidental  Death  Co.,  1  B.  *  S.  782,  81  L.  J  Q.  B.  17,  5  L.  T.  N. 
8.  660,  8  Jur.  N.  8.  600. 

{l]  Ro  County  Life,  5  Ch.  App.  288,  39  L.  J.  Ch.  471,  2  L.  T.  N.  S.  537,  18 
W.  R  890. 

296 


Vf  ( 


371 


THE  LAWS  OF  INSURANCE. 


clared  purpose.  For  example,  a  proprietary  coiuuaiiy  being  a  joint- 
stock  partnership,  the  whole  of  the  profits  of  which  are  divisible 
amongst  the  shareholders,  cannot  grant  a  policy  participating  in 
profits,  nor  can  a  mutual  company  grant  a  policy  creating  no  lia- 
bility (m).  But  by  the  constitution  of  the  company  or  statute 
special  means  may  be  provided  for  shifting  a  company  from  one 
class  to  another. 

Mutual  insurance  company  can't  issue  policies  to  non-members. — In  a 
mutual  insurance  association,  policies  cannot  bo  issued  to  non- 
members  at  special  or  any  rates,  unless  (1)  the  rules  of  the  associa- 
tion so  provide,  or  (2)  some  means  of  agreeing  to  such  issue  be 
provided  by  the  rules,  and  the  method  there  indicated  be  properly 
followed  (m). 

Policies  ultra  vires  do  vx)t  hind  company. — If  such  policies  are  issued 
uUra  vires,  the  policy-holders  are  not  creditors  of  the  association  at 
all,  since  the  contract,  not  being  within  the  scope  of  the  agent's 
authority,  does  not  bind  the  association  at  all  (m). 

The  persons  who  enter  into  ultra  vires  contracts  with  an  insur- 
ance company  have  no  right  to  complain.  They  are  held  to  have 
had  notice  of  the  nature  of  the  body  which  was  contracting  with 
them,  and  of  course  notice  of  the  rules  and  regulations  which  form 
the  constitution  of  that  company  (n). 

How  contracts  made. — The  contracts  of  an  insurance  com- 
[*  371]  pany  must  be  in  *the  form  prescribed  by  its  constitution  (o). 
But  cases  may  arise  in  which  the  direction  contained  in 
the  constitutive  instruments  of  the  comi)any  are  not  absolute ;  and 
the  courts  will  not  be  astute  to  prevent  insurance  companies  from 
resisting  claims  by  setting  up  the  absence  of  a  seal,  or  non-compli- 
ance with  directions  within  their  own  special  control.  Thus  it  has 
been  held  in  Canada  that,  if  they  receive  premiums,  they  must 
execute  and  issue  a  valid  policy  (p). 

Contracts  incidental  to  the  management  of  the  company  need 
not  be  by  writing  or  under  seal  (q). 

Contracts  of  insurance  must  not  only  be  evidenced  in  the  man- 
ner required  by  the  constitution  of  the  company  ;  they  must  also 
undertake  permitted  risks,  and  must  be  in  the  form  prescribed,  if 
any  (r),  ana  contain  the  limitations  of  liability,  if  any,  required  by 
such  constitution. 

In  Canada  absence  of  seal  not  pleadable. — In  Canada  all  the  Courts 


(m)  Cory  and  Hatckaley's  Case,  82  L.  T.  N.  S.  625,  23  W.  R.  039,  84  Ch.  D. 
522. 

(n)  Ibid.,  and  sec  Ernest  v.  Nicholls,  0  H.  L.  C  407. 

(o)  Montreal  Insurance  Co.  v.  M'Gillivray,  13  Moore  P.  C  89,  8  \V. 
R.  165. 

ip)  London  Life  Co.  v.  Wright,  5  Canada  (S.  C.)  400 

(q)  Companies  Act,  1807  (80  &  31  Vict.  c.  181),  s.  87.  Beer  v.  London  and 
Paris  Hotel  Co.,  L.  R.  20  Kq  412 

(r)  Sep  in  Tannion  v.  Royal,  2  H.  &  M.  185,  88  L.  J.  Ch.  400.  10  L.  T.  N.  S. 
160,  12  W.  R.  549.  Railway  Passeugere'  Assurauco  Co-'a  Act  (27  and  28  Vict, 
cap.  cxxv.),  schedule. 

296 


1 


COMPANIES. 


372 


held  that  for  an  insurance  company  to  set  up  the  want  of  a  seal 
(prescribed  aa  necessary  by  its  Act  of  incorporation)  is  such  a 
fraud  as  a  Court  of  Equity  ought  to  prevent  (s). 

Policy  void,  insurers  bound  to  issue  fresh  one. — Tn  an  older  case, 
while  allowing  that  a  certain  policy  wys  void  because  not  in  the 
statutory  form,  the  Court  deemed  the  insurers  bound  to  issue  a 
valid  policy  of  proper  date  (t). 

Manager  granting  policy  uttra  vires. — Where  an  insurance 
company  is  incorporated  by  put)lic  ^statute,  the  power  of  [  *372] 
its  manager  in  relation  to  insurance  must  be  taken  to  be 
known  by  persons  insuring  with  the  company.  And  if  he  makes 
policies  outside  the  scope  of  his  authority,  they  will  not  bind  the 
company.  And  if  by  special  Act  the  company  can  only  bind  itself 
by  policy,  and  not  by  parol  contract  of  insurance,  the  power  of  the 
manager  is  restricted  by  this  limitation  of  the  power  of  the 
principals  (u). 

Effect  of  ultra  vires  acts.  Of  informal  acts. — Speaking  generally, 
an  insurance  company,  like  any  other  company,  is  bound  by  any 
deed  under  its  seal  (v),  unless  fraud  (x)  or  illegality  be  established 
iy).  Illegality  will  include  uUra  vires  acts,  since  corporations  and 
analogous  bodies,  being  creatures  of  law,  cannot  lawfully  go  beyond 
the  four  corners  of  their  constitution.  But  mere  informalties  in 
the  exercise  of  their  duties  by  directors  will  not  invalidate  a  policy 
(z)  for  a  deed  of  settlement  and  a  private  Act  of  Parliament  con- 
stituting a  company  are  to  be  construed  as  a  partnership  deed. 
To  violate  them  may  be  a  breach  of  trust  as  between  the  directors 
and  the  shareholders,  but  acts  not  done  according  to  them  may 
bind  the  company  (a). 

Appointment  of  solicitor  by  articles  of  asuociation. — Where  the 
articles  of  association  of  an  insurance  company  appointed  a  solic- 
itor to  the  company  who  was  to  transact  all  their  legal  business, 
and  not  to  be  removable  except  for  misconduct,  it  was  held  not  to 
amount  to  an  agreement  to  employ  him,  the  articles  being  a  con- 


'   I     i 


(a)  London  Life  v.  Wright,  supra.  Wright  v  Sun  Mutual,  29  U.  C.  (C.  P.) 
221. 

(t)  Perry  v.  Newcastle  Fire  Co.,  8  U.  0.  (Q.  B.)  863.  See  Fowler  v.  Scottish 
Equitable,  28  L.  J.  Ch.  225,  32  L.  T.  119,  4  Jiir.  N.  8.  1169,  7  \V.  11.  5  Prince 
of  Wales  Lisurance  Co.  v.  Harding  E.  B.  &  E.  183,  222,  27  L.  J.  Q.  B.  297,  4 
Jur.  N.  S.  851 

(m)  Montreal  Insurance  Co.  v.  NGillivray,  13  Moore  P.C.  87,  125  8  W.  R. 
165. 

(«)  Agar  v.  Athenaeum  Ins.  Co.,  3  C  B.  N.  S..  725,  27  L.  J.  C.  P.  95,  6  W. 
R.  277. 

(«)  Athenamm  Ins.  Co.  v.  Pooley,  3  De  G.  &  J.  294,  28  L.  J.  Ch.  119,  5  Jur. 
N,  8.  129. 

(y)  Cary  and  Hawkley's  Case,  8  Ch.D.  522,  82  L.  T.  N.  S.  525,  23  W.  R.  989. 

(«)  Prince  of  Wales  Insurance  Co.  v.  Harding,  E.  B.  &  E.  183,  27  L.  J.  Q  B. 
297,  4  Jur.  N.  8.  851 

(«)  mil  V.  Darenth  Railway  Co.  1  H.  &  N.  305.  Bargate  v.  Shortridge,  8 
H  L.  C.  297.  I'rince  of  Wales  Ins.  Co.  v.  Harding,  supra,  Sperings'  Appeal, 
10  Am.  Rep.  684,  71  Peun.  St.  11. 

297 


W^rm 


■'  'hl\ 


■i>  .1.. 


*374 


THE   LAWS  OF  INSURANCE. 


tract  between  the  shareholders  alone,  and,  so  far  as  the 
[  *373]  solicitor  was  concerned,  res  inter  alios  acta.    Lord  *Cairn8 
doubted  whether  the  clause  was  not  void  as  against  public 
policy  (6). 

Solicitor  cannot  claim  for  costs  as  a  mere  creditor.— The  solicitor  of 
an  insurance  company  cannot  in  respect  of  this  bill  of  costs  claim 
to  be  treated  as  an  outside  creditor  and  be  paid  in  full,  for  he  must 
be  taken  to  have  the  fullest  notice  and  knowledge  of  the  constitu- 
tion of  the  company  and  the  limitation  placed  thereby  on  the  lia- 
bility of  the  shareholders.  If  he  is  a  shareholder,  the  case  is  still 
stronger  (c). 

Debentures  invalid  when  in  fraud  of  company. — If  debentures  are  is- 
sued within  the  powers  of  an  insurance  company,  but  in  fraud  of 
the  company,  they  will  be  invalid  in  the  hands  of  a  bona  fide  pur- 
chaser without  notice,  provided  that  the  shareholders,  on  becoming 
aware  of  the  transaction,  do  not  acquiesce  or  do  other  ar  3  which 
would  raise  an  estoppel  (d). 

Person  who  is  party  to  act  vltra  vires  cannot  claim. — Whenever  any 
party  dealing  with  an  insurance  company  knowingly  combines  with 
the  (lirectors  to  do  any  act  ultra  vires  to  the  prejudice  of  the  share- 
holders, e.  g.,  to  throw  upon  them  unlimited  liability  when  the  di- 
rectors are  required  so  to  frame  policies  as  to  confine  the  remedy  of 
the  assured  to  the  capital  and  funds  in  the  hands  of  the  company, 
the  shareholders  might  very  fairly  and  reasonably  deny  their  lia-  ' 
bility  on  that  policy.  But  it  would  bo  unjust  to  allow  them  to  take 
advantage  of  an  irregularity  of  the  directors  (who  aro  denominated 
their  agents)  in  cases  where  they  cannot  show  that  they  have  been 
in  any  way  prejudiced  by  the  irregularity,  and  the  assured  cannot 
be  charged  with  any  fraud  or  impropriety  (e). 

If  risk  taken  ultra  vires  assured  canH  recover. — The  risk  un- 
[*  374]  dertaken  by  a  contract  of  insurance  *mu8t  be  within  'iia 

powers  given  to  or  taken  by  the  company.    If  the  aour 
is  not  authorized  to  take  the  particular  class  of  risk,  the  a.^^^*.     ' 
cannot  recover  for  a  loss  by  that  risk  in  any  case  where  he  hsL"    (.>• 
notice,  constructive  or  express,  of  the  powers  of  the  company. 

The  Royal  Exchange  Assurance,  for  instance,  could  not  under  its 
original  Act  insure  on  vessels  engaged  in  inland  navigation,  nor 
could  the  company  do  so  until  empowered  by  41  Geo.  III.  c.  57. 

Misapplication  of  funds  restrained  by  injunction. —  The  Courts  have 
always  been  careful  to  i>revent  the  applicutiup  of  the  moneys  of  the 
shareholders  who  contribute  to  joint-stock  undertakings  to  any  pur- 


(6)  Elif  V.  Positive  Assurance  Co  ,  1  Ex.  D.  88,  45  L  J.  Ex.  451,  84  L. 
S.  190,  24  W.  R.  838.    8eo  Hummers  v.  Eldston,  18  Jur.  21  (H.  L.). 
Sadler's  Case,  10  S.  J.  571  (AH).  Arb),  per  Lord  Cairns. 


T  N 


,  i)  Athena;um  v.  Poole}/  (1858),  8  Do  O.  &  J  294, 28  L  J.  Ch.  110, 1  Giff.  102. 
And  see  British  Mutual  Banking  Co.  v.  Charnwood  Forest  Railway,  18  Q.  B.  1). 
714. 

(c)  Prince  of  Wales  Ins.  Co.  v.  Harding,  E.  B  &  E.  183,  216,  27  li.  J.  Q.  B. 
297,  4  Jur  N.  S.  861.    Agar  v.  Athenaeum  Ins   Co.,  8  C.  B.  N.  S.  726,  72  L  J. 
C.  P.  06,  0  W.  R.  277. 
298 


COMPANIES. 


*375 


pose  other  than  that  which  id  legitimately  the  purpose  and  object 
of  the  association;  and  if  a  case  arises  where  the  managers  of  such 
an  undertaking  so  apply  its  money,  any  shareholder  may  obtain  an 
injunction  restraining  them  therefrom  (/). 

Power  to  pay  loss  not  within  policy. — But  if  the  company  has  power 
to  grant  policies  against  a  certain  risk,  and  a  loss  occurs  by  such 
risk  to  property  on  which  a  policy  has  been  granted  excepting  such 
risk,  it  would  seem  that  the  general  body  of  shareholders  could 
waive  such  exception,  and  that  the  directions  of  an  insurance  com- 
pany usually  have  sufficient  discretion  given  them  in  management 
to  enable  them  to  waive  the  exception  and  pay  the  loss,  if  it  seems 
in  the  company's  better  interest  to  do  so.  To  do  so  is,  of  course,  a 
species  of  advertisement. 

The  principle  seems  to  be  that  what  the  company  as  a  whole  can 
do,  its  general  agents  can  likewise  do  (g). 

Powers  of  investment. — Powers  of  investment  provided  by  the  con- 
stitution of  tlie  company  may  be  varied  or  amended,  but,  until 
amended,  cannot  be  exceeded. 

*Powers  to  lend  on  the  security  of  shares  in  the  company  [*  375] 
or  its  own  policies,  or  on  mortgage,  must  be  specially  in- 
serted.   And  the  latter,  in  the  case  of  corporations,  requires  special 
provisions,  owing  to  the  Mortmain  Acts,  since  by  foreclosure  they 
may  become  owners  of  and  dealers  in  land  (A). 

'i'hus  the  Royal  Exchange  Assurance  coCild  not  advance  money 
on  the  security  of  freehold,  copyhold,  or  leasehold  property  until 
empowered  to  do  so  by  6  Geo.  IV.  c.  36,  which  Act  enables  it  also 
to  foreclose,  but  not  to  hold  for  more  than  two  years,  except  in 
case  of  a  difficulty  as  to  the  title;  and  it  was  allowed  to  dispense 
with  a  licence  in  mortmain. 

An  investment  clause,  empowering  the  directors  of  an  insurance 
company  to  buy,  sell,  and  re-sell  life,  reversionary,  and  other  per- 
sonal estates  and  interests  is  not  wide  enough  to  include  dealmgs 
in  stock  and  shares  in  the  face  of  controlling  words,  such  as  gen- 
erally to  carry  on  the  business  of  life  insurance  and  of  an  annuity, 
endowment,  loan,  and  reversionary  interest  society  (i).  Nor  can 
an  insurance  company  take  shares  in  a  building  society. 

"A  corporation  proposing  to  engage  in  any  transaction  not  within 
its  express  or  impliea  power  may  be  restrained  from  so  doing  or  so 
continuing"  (k). 

Shareholder'' 8  liability  affected  by  nature  of  company. — A  sharehold- 
er's liability  is  afl'ected  by  the  constitution  of  the  insurance  com- 

(/)  Tatmton  v.  Royal  Insurance  Co.,  1  H.  &  M.  153,  P3  L.  J.  Ch.  40G,  10  L. 
T.  N.  S.  150,  12  W.  R.  649,  and  cases  there  cited.  See  per  Cranworth,  C,  in 
Eastern  Countries  Railway  Co.  v.  Ilawkes,  5  H  L.  C.  331,  348. 

(a)  Taunton  v.  Royal,  supra. 

(*«)  Royal  Bank  of  Indices  Case,  4  Ch 

(i)  Athenanim  v.  Puoley,  28  L.  J.  Ch. 
Jiir  N.  8.  129. 

{k)  Brice  Ultra  Vires  1T8. 


App.  253,  260,  per  Selwyn,  L.  J. 
119,  3  De  G.  &  J.  294,  1  Giff.  103,  6 


299 


■■-i 


:il 


i 


.  t , 


*377 


THE   LAWS  OP  INSURANCE. 


pany  in  which  he  holds.  If  it  is  a  corporation  other  than  a  com- 
pany incorporated  under  the  Joint-Stock  Acts,  he  is  under  no  in- 
dividual liability  beyond  his  liability  to  the  corporate  body  of 
which  he  is  a  member.  If  it  is  a  company  under  the  Companies 
Acts,  he  is  liable  only  to  the  amount  limited  by  the  memorandum 

of  association. 
[*  376]     *If  a  company  is  registered  as  unlimited,  it  may  be  re^ 
registered  as  limited  under  42  &  43  Vict.  c.  76. 

Where  the  company  is  not  a  corporation,  or  brought  within  the 
Companies  Act,  it  is  a  common-law  partnership,  with  the  ordinary 
inci(^nts  thereof,  unless  any  special  provisions  in  its  deed  of  set- 
tlement or  the  policies  restrict  the  liabilities,  and  in  their  absence 
the  liability  of  each  shareholder  is  unlimited. 

Executors  of  shareholder  as  contributories. — Executors  of  a  deceased 
shareholder,  who  have  transferred  their  testator's  shares  before 
liquidation,  cannot,  nor  the  survivor  of  them,  be  placed  on  the  list 
of  contributories  (I) — 

(1)  In  respect  of  debts  due  at  the  time  of  transfer,  as  to  which 
the  liability  of  shareholders  is  limited  to  their  shares  in  the  capital 
— €.  g.,  debts  on  policies,  annuities,  and  indemnities  given  on  tailing 
over  the  business  of  other  companies. 

(2)  In  respect  of  debts  as  to  which  such  executors  are  only  in 
the  position  of  sureties  for  the  transferee  of  the  shares — e.  g.,  gen- 
eral debts  which  accrued  before  the  transfer. 

Where  shares  in  name  of  trustees. — (3)  For  the  costs  of  the  liquid- 
ation. 

Where  shares  stood  in  the  joint  names  of  two  persons  without 
beneficial  ownership,  and  one  was  dead,  his  executors  were  put  on 
the  list  of  contributors,  jointly,  with  the  surviving  shareholder,  but 
only  in  respect  of  the  liabilities  up  to  the  time  of  his  death  (m),  on 
the  ground  that  the  testator  was  liable  inter  sodos  (by  signing  the 
deed  of  settlement)  on  the  joint  and  several  covenant  to  pay  calls 
therein  contained. 

But  the  executors  of  a  man  who  in  1846  applied  for  and  paid 
the  deposit  on  shares,  and  was  registered  in  respect  thereof,  but 
never  signed  the  deed  of  settlement,  were  held  not  liable  to  con- 
tribute in  1872  (n). 
[*377]  *Secretary  of  company  being  transferee  of  shares  in  trust  for 
company  liable  as  contrihutory,  but  entitled  to  indemnity. — I'he 
secretary  of  an  insurance  company,  to  whom  shares  in  the  com- 
pany were  transferred,  to  be  held  by  him  as  trustee  for  the 
company,  was  held  liable  to  contribute  in  respect  thereof,  but  entitled 
to  prove  for  indemnity.  It  would  have  been  otherwise  if  the  net 
constituting  him  such  trustee  was  to  hi:)  knowledge  vUra  vires  (o). 

{I)  Clarke's  Executors'  Case,  Reilly  (Alb.  Arb  )  223,  10  S.  J.  752. 

(m)  Kirby's  Case^UeiWy  (Alb.  Arb.)  CV. 

(n)  M'Kenzie's  Executor's  Case,  18  S.  J.  223  (Eur.  Arb.). 

(o)  Easum's  Case,  Reilly  (Alb.  Arb.)  170. 

800 


COMPANIES. 


*378 


Ececutora  of  aharefwlders  who  have  issued  statutory  advertisement  j or 
creditors,  liable  to  contribute. — When  executors  of  a  shareholder  claim 
the  benefit  of  a  statutory  advertisement  for  creditors  (by  Lord  St. 
Leonards'  Act,  22  &  23  Vict.  c.  35,  p.  99),  they  will  still  be  en- 
tered on  the  list  of  contributories,  with  a  note  of  their  claim  as  to 
fall  distribution  of  assets. 

.  Vendor  of  shares  in  amalgamated  company  liable  if  on  register. — A 
mail  whose  name  is  on  the  register  of  the  company  which  has  been 
amalgamated  with  another  to  which  he  has  sold  his  shares,  is  stili 
liable  as  a  contributory  if  his  name  remains  on  the  register,  even 
though  the  purchasing  company  had  undertaken  to  have  it  re- 
moved. He  will  of  course  have  a  remedy  over  for  breach  of  the 
undertaking  (p).  Jo  also  i  f  he  has  accepted  shares  in  the  transferee 
couipiiny  instead  of  his  old  shares,  if  nis  name  is  still  on  the  old 
register  in  respect  of  them  (g). 

Executor  who  has  sold  testator's  shares  to  some  one  Twt  capable  of  being 
put  on  register,  still  liable. — If  an  executor  does  not  sell  his  testator's 
phares  to  some  one  whoso  name  can  be  put  on  the  register  instead 
of  the  testator,  but  receives  back  from  the  amalgamating  or 
transferee  company  the  amount  paid  on  the  Bharea,  and  delivers 
up  the  share  certificates  to  them,  he  will  not  be  discharged  from 
liability  on  those  shares  as  a  contributory  to  the  amalgamated  or 
transferor  company,  unless  all  outstanding  creditors  thereof  have 
been  settled  with,  or  have  assented  to  the  transfer  (r). 
.  ^Contributory  entitled  to  have  bonus  deducted  from  calls. — A  [*  378] 
contributor  when  called  on  is  entitled  to  have  deducted 
from  the  calls  made  on  him  the  amount  of  bonusses  appropriated 
out  of  profits  to  his  shares  and  credited  thereon  (s). 

Liability  notwithstanding  forfeiture  for  not  paying  calls. — Forfeiture 
of  his  shares  for  non-payment  of  calls  will  not  relieve  him  from 
contributing  in  the  winaing  up  ({). 

Transfer  must  be  complete  or  shareholder  must  contribute. — If  a  share- 
holder has  taken  steps  to  transfer  his  shares  before  winding  up, 
but  by  no  fault  of  the  directors  has  failed  to  complete  them,  he 
must  contribute  (u).    So  if  they  disapprove  the  transferee  (v). 

Liquidating  ahareholdn  whose  trustee  disclaimed. — If  the  share- 
holder has  liq^uidated,  and  his  trustee  disclaimed,  neithei!  can  bo 
made  a  contributory  if  the  company  has  proved  in  the  liquidation 
for  unpaid  calls  (a;),  or  could  have  so  proved,  but  has  failed  to  do 


(p)  Lee's  Case,  Reilly,  (Alb.  Arb.)  8,  Buckley  862,  863  (1st  ed.). 
Case,  Reilly  (Alb.  Arb. )  40,  executor  of  deceased  shareholder. 

{q)  PownalVs  Case,  Reilly  (Eur.  Arb.)  8 
(r)  Lancy^s  Case,  Reilly  (Eur.  Arb.)  18. 
(«)  Cathie's  Case,  Reilly  (Eur.  Arb.)  27. 
[t)  Bridger'a  and  NeiVs  Case,  4  Ch.  App.  286i 
(w)  Read's  Case,  Reilly  (Eur.  Arb)  10. 
Iv)  Lloyd's  Case,  Reilly  (Eur.  Arb  )  85. 
(x)  Brown's  Case,  Reilly  (Eur.  Arb.)  82. 

801 


NichoU'i^ 


it(.« 


W 


Mi 


m\ 


m 


ht: 


::;!# 


-  t  \.\ 


Mm 


*380 


THE   LAWS  OP  INSURANCE. 


t 


80,  since  their  claim  is  not  incapable  of  being  fairly  estimated 
within  the  Bankruptcy  Acts  (y). 

Promoter^a  sharesfullypaid  carry  liability  to  contribute. — ^Wherefree 
shares  fully  paid  up  were  distributed  amongst  the  promoters  of  an 
insurance  company,  the  recipients  thereof  were  held  liable  to  con- 
tribute in  the  winding  up  of  the  company,  as  the  transaction  was  a 
fraud  on  the  other  shareholders,  but  without  prejudice  to  an  in- 
demnity from  the  directors  who  gave  the  shares  (2), 

Director  liable  to  contribute  in  respect  of  shares  necessary  to  qualify . — 
Where  the  articles  of  association  provide  that  no  one  shall  be 
eligible  as  a  director  who  does  not  hold  a  certain,  number  of  shares 
in  his  own  right,  and  that  any  director  «rho  ceases  to  hold 
[*  379]  the  requisite  number  *shaH  be  disqualified,  any  one  who  is 
electedf  and  acts  as  a  director  without  qualifying  will  be 
liable  as  a  contributory  to  the  number  of  shares  which  he  ought  to 
have  held,  since  by  acting  as  director  he  enters  into  an  implied 
contract  to  take  the  qualifying  shares  (a). 

And  where  the  brother  of  a  managing  director  executed  the  deed 
of  settlement  in  respect  of  part  of  a  number  of  shares  improperly 
given  his  brother  by  the  directors,  he  was  held  liable  as  a  contribu- 
tory in  respect  of  such  part  (6). 

Shareholder  fraudulently  induced  to  take  shares. — The  same  princi- 
le  applies  as  between  an  insurance  company  and  its  shareholders, 
"here  the  latter  have  been  fraudulently  induced  to  take  shares, 
they  will  have  no  defence  to  an  action  for  calls  thereon  unless  they 
have  repudiated  the  contract  and  done  no  act  to  make  themselves 
liable  as  shareholders  after  discovering  the  fraud.  But  till  the 
shareholder  has  succeeded  in  severing  hie  connection  with  the  com- 
pany and  has  ceased  to  remain  on  the  register,  he  will  be  liable 
with  the  rest  to  contribute  within  the  limits  prescribed  in  the  con- 
stitutive instruments  to  the  payment  of  claims  on  the  company  (c). 

Holding  of  land.  Two  questions. — With  regard  to  the  holding  of 
land  by  insurance  companies  two  questions  arise— 

(1)  Whether  a  company  can  hold  land  at-all? 

(2)  Whether,  having  regard  to  the  Statutes  of  Mortmain,  shares 
in  a  company  holding  land  can  be  devised  or  bequeathed  for  char- 
itable purposes? 

[*  380]     *Power  to  hold  land. — With  respect  to  question  (1),  the 
power  to  hold  lands  may,  speaking  generally,  be  said  to  de- 
pend upon  the  powers  conferred  by  the  instrument  constituting  the 
company  (d).    Where  a  company  is  registered  under  the  Joint* 

(y)  Re  Mercantile  Mutual  Marine,  26  Ch.  D.  416. 
(z)  DarneWs  Case  (1857),  3  Jur.  N  S.  803. 
(a)  Stephenson's  Case,  45  L.  J.  Ch.  488,  per  Jessel,  M.  R. 
(6)  Lord  Claud  Hamilton's  Case  (;852),  8  Ch.  App.  648,  42  L.  J.  Ch,  466. 
HoWs  Case,  16  Jur.  869,  per  Crunworth,  V.  C. 

(c)  Deposit  and  General  Life  v.  Ayscough,  3  E.  &  B.  761,  26  L.  J.  Q.  B.  29,  2 
Jur.  N.  8.  812.  See  Partridge  v.  Albert,  16  S.  J.  199,  per  Lord  Cairns  (Alb. 
Arb.). 

(d)  Brice  Ultra  Vires  78. 

392 


COMPANIES. 


381 


Stock  Companies  Act,  1844  (7  &  8  Vict.  c.  110),  it  may  bv  g.  25 
purchaee  and  liold  lands,  and  the  power  of  a  company  registered 
under  the  Act  of   1862  to  hold  land  is  unrestricted  (e). 

Shares  in  private  partnership  mthin  Mortmain  ^c<.— With  respect 
to  question  (,2),  shares  in  a  partnership  holding  land,  such  partner- 
ship not  being  a  joint-stock  company,  are  an  interest,  in  land  under 
the  Mortmain  Act,  and  therefore  cani;  jt  be  disposed  of  by  will  to 
charitable  purposes. 

Shares  in  joint-stock  companies. — But  shares  in  a  joint-stock  com- 
pany holding  land,  whether  the  company  be  corporate  or  unincor- 
porate,  are  not  within  the  Statutes  of  Mortmain,  and  will  therefore 
pass  by  will  to  a  charity  (/). 

Reason  for  the  distinction. — ^The  distinction  between  the  case  of  a 
joint-stock  and  a  non-joint-stock  partnership  holding  land  is  this, 
that  in  the  case  of  a  joint-stock  company  the  intent  and  meaning 
of  the  partners  is  that  the  partnership  is  to  be  in  the  nature  of  a 
corporation,  and  intended  to  have  perpetual  existence,  with  fluctu- 
ating bodies  of  members  from  time  to  time,  just  like  a  corporation. 
No  partner  is  ever  supposed  to  have  anvthing  to  do  with  the  land 
except  as  one  of  the  society  through  the  machinery  provided  by 
th6  Act  or  deed  of  settlement  and  is  never  intendea  to  have  any- 
thing to  do  with  the  land  in  anv  shape  or  form,  except  to  get  the 
profits  from  the  land,  or  from  the  business  of  which  the  land  is  a 
part,  and  it  is  always  intended  that  every  share  should  pass  in  the 
market  as  a  distinct  thing,  and  in  point  of  beneficial  owner- 
ship wholly  unconnected  with  the  land,  or  *with  the  real  [*  381] 
assets  of  the  partnership  property  of  the  company  (g). 

Policy  secured  on  real  estate  of  company  nat  within  Mortmain  Act. — 
A  policy  secured  on  the  property  of  a  company  which  consists 
partly  in  real  estate  is  not  so  connected  with  land  as  to  make  a  gift 
of  the  policy  to  a  charity  invalid  under  the  Mortmain  Act,  whether 
the  policy-holder  is  or  is  not  a  member  of  the  company  (h). 

All  life  insurance  companies  are  under  Act  of  1870. — All  life  insur- 
ance associations  registered  or  unregistered  under  the  Companies 
Acts,  corporate  or  unincorporate,  except  those  registered  under  the 
Friend  Iv  Societies  Acts,  are  within  the  Life  Assurance  Companies 
Act,  1870  (i). 

Fire  insurance  companies  are  under  the  ordinary  law  as  to  joint- 
stock  companies,  but  the  business  of  life  insurance  companies  is  to 
a  certain  extent  regulated  by  special  statutes. 

Deposit  by  life  companies  of  £20000. — By  the  Life  Assurance 
Companies  Act,  1870,  s.  3,  every  company  commencing  the  busi- 


(e)  25  &  20  Vict.  c.  89,  as.  18-21. 

(/)  Ashworthv.  Munn,  15  Cli.  D.  363,  50  L.J.  Ch.  107,  28  W.R.  965. 
V.  Pengall,  2  Do  G  M.  &  G.  599.    2.j  &  2d  Vict.  c.  89,  s.  22. 

(g)  Per  James,  L.  J.,  Ashworth  v.  Munn,  15  Ch.  D.  363  at  868,  50  L. 
107,  28  W.R. 965. 

(A)  J^arch  v.  Attorney- Generaif  6  Beav.488. 

li)  83  &  84  Vict  c.  61.  a.  2. 

803 


Mysra 
J.  Ch. 


*383 


THE   LAWS  OF  INSURANCTL 


ness  of  life  assurjnce  within  the  United  Kidgdom,  before  it  can  get 
a  certificate  of  incorporation,  must  pay  into  the  Chancery  Division 
of  the  High  Court  the  sum  of  £20,000  (A;). 

Investment  thereof. — This  sum  is  to  be  invested  in  one  of  the  se- 
curities usually  accepted  by  the  High  Court  for  the  investment  of 
funds  placed  from  time  to  time  under  its  administration.  Tho 
company  making  the  deposit  is  to  choose  the  particular  security 
and  to  receive  the  income  therefrom  (I).  And  the  said  sum  in  court 
is  to  be  returned  to  the  company  so  soon  as  the  life  assurance  fund 

accumulated  out  of  the  premium  reaches  £40,000  (m). 
[*  382]  ♦Once  the  £20,000  is  paid  into  court,  all  orders  with  re- 
spect to  paying  the  same  into  or  out  of  court,  and  the  in- 
vestment or  return  thereof,  and  the  payment  of  the  dividends 
and  interest  thereof,  may  be  made,  altered,  and  revoked  by  the 
like  authority  and  in  the  like  manner  as  orders  with  respect  to 
any  other  money  to  be  paid  into  or  out  of  court,  but  subject  to  any 
rules  made  or  to  be  made  by  the  Board  of  Trade  ns  to  the  payment 
and  repayment  of  the  deposit,  the  investment  or  dealing  with  the 
same,  the  deposit  of  stocks  or  securities  in  lieu  of  money,  and  the 
payment  of  the  interest  or  dividends  from  time  to  time  accruing 
due  on  any  such  investment,  stocks,  or  securities  in  respect  of  such 
deposit  (n).  The  Court  will  only  allow  investment  in  securities  or- 
dinarily accepted  by  the  Court. 

The  deposit  is  part  of  company's  assets. — The  deposit  may  be  made 
by  the  subscribers  of  the  memorandum  of  association  of  the  com- 
pany, or  any  of  themj  in  the  name  of  the  proposed  company,  and 
such  deposit  upon  the  incorporation  of  the  company  shall  be  deemed 
to  have  been  made  by,  and  to  be  part  of  the  assets  of,  the  com- 
pany (o). 

Part  of  life  funds. — The  said  deposits  shall,  until  returned  unto  the 
company  or  the  depositors,  be  deemed  to  form  part  of  the  life  assur- 
ance fund  of  the  company  (p). 

Deposit  by  foreign  companies. — ^Very  few  life  insiirance  offices  seem 
to  have  been  founded  since  1870.  Some  foreign  companies,  how- 
ever, have  commenced  business  here,  and  a  quest  ion  may  be  raised 
whether  their  foreign  assets  are  to  be  estimated  in  deciding  whether 
or  not  they  must  pay  into  court  or  not.  From  tho  wording  of  the 
statute  they  would  seem  bound  in  any  case  to  make  the  pay- 
[*  383]  ment  as  a  preliminary  to  getting  their  certificate  of  *incor- 
poration,  and  there  is  no  mention  of  dispensing  with  the 
payment.    On  the  other  hand,  there  seems  no  reason  why  the  life 

(k)  88  &  34  Vict.  c.  61,  s.  8,  as  amended  by  34  &  86  Vict  c.  58,  s.  1. 

(l)  Ttie  object  of  the  section  is  to  prevent  bubble  cumpanies  being  created 
simply  for  sale,  and  to  test  bona  fides.,  202  Hansard  1171. 

(m)  84  &  85  Vict,  c  58,  s.  1. 

(n)  85  k  86  Vict,  c  41,  s.  1.  The  Board  of  Trade  Rules  were  made  Aug.  28, 
1872. 

(o)  ,85  k  re  Vict,  c  41.  s.  1. 

(p)  See  In  re  Cotoniat  Mutual  Life  Society^  21  Gh.  D.  887.  40  L.T.  N.  S.  282, 
80  W.  B.  458. 

304 


COMPANIES. 


*384 


assurance  fund  accumulated  out  of  the  premiums  should  be  within 
the  jurisdiction.  And  this  view  would  seem  to  prevail,  as  the  New 
York  Life  Assurance  Company  appears  not  to  have  made  any  pay- 
ment into  court,  and  instead  thereof  has  invested  a  large  sum  with 
English  trustees,  to  form  a  security  for  policies  issued  to  people  in 
the  United  Kingdom  (9). 

Keeping  qfcompany^a  accounts.  Life  assurance  fund  a  separate  trust 
fund  for^  sole  security  of  polvcy-holder. — The  funds  of  all  insurance 
companies  derived  from  life  assurance  annuitv  contracts  must  be 
earned  to  a  separate  account  and  fund,  callea  the  life  assurance 
fund  of  the  company ;  and  that  fund  is  made  by  the  Act  as  abso- 
lutelv  the  security  of  the  life  policy  and  annuity  holders  as  though 
it  belonged  to  a  company  carrying  on  only  life  business,  Jind  is  not 
liable  for  any  contracts  of  the  .company  to  which  it  would  not  have 
been  liable  had  the  company  connned  itself  to  life  assurance  (r). 

Security  where  contra^is  made  before  August  1870. — ^This  enactmeiit 
does  not  diminish  the  liability  of  the  life  assurance  fund  for  any 
contract  of  the  company  made  before  August  9, 1870.  The  holders 
of  such  contracts  can  still  have  recourse  to  the  fund,  which,  so  for 
as  they  are  concerned,  is  not  a  trust  fund  for  the  policy-holders  (s). 

Or  where  the  company  is  mutual. — This  provision  as  to  a  life  assur- 
ance fund  does  not  apply  to  companies  che  whole  of  whose  profits 
are  divided  among  the  policy-holders,  and  whose  policies  bear  on 
the  £ice  of  them  a  distinct  declaration  of  the  liability  of  the  policy- 
holders (0. 

Such  a  company  is  a  pure  mutual  company,  where  all 
must  contribute,  and  in  the  profits  of  which  all  *share.  [*  384] 
There  was  at  the  passing  of  the  Act  only  one  such  not  com- 
ing within  the  Friendly  Societies  Acts  (w). 

Company  must  lodge  balance-sheet  with  Board  of  Trade. — Every 
company  issuing  or  li  tble  on  policies  of  assurance,  or  granting  an- 
nuities on  human  life,  within  the  United  Kingdom,  not  being  reg- 
istered under  the  Friendly  Societies  Acts,  must — 

Annually  at  the  end  of  its  financial  year  prepare  and  deposit 
with  the  Board  of  Trade  a  statement  ot  its  revenue  account  and 
balance-sheet  for  that  year,  which,  if  the  company  carry  on  life 
business  exclusively,  must  be  in  the  forms  contained  in  the  first 
and  second  schedules  to  the  Act,  and,  if  concurrently  with  other 
business,  must  be  in  the  forms  contained  in  the  third  and  fourth 
schedules  thereto.  Any  of  these  forms  may  be  altered  by  the  Board 
of  Trade  on  the  application  or  with  the  consent  of  a  company  for 
the  purpose  of  adapting  them  to  the  circumstances  of  such  com- 
pany, or  of  better  carrying  into  eflTect  the  object  of  the  Act,  which 


c.  61,  8.  4,  as  amended  by  35  &  36  Vict.  c.  41,  s-  2. 
c.  61,  sched.  4,  note. 


(q)  83  &  34  Vict 

(r)  88  &,  84  Vict 

C«)  86  &  86  Vict,  c  41,  s.  2,  and  see  202  Hansard  1178. 

(0  83  &  84  Vict,  c  61,  s.  4. 

(ti)  See  202  Hansard  1173. 

20  PORTER  ON  INSURANCE. 


WMf 


i'l, 


;■  ■$y! 


305 


'iiU 


*386 


THE  LAWS  OF   INSURANCE. 


has  no  preamble,  but  is  to  amend  the  law  relating  to  life  assurance 
companies. 

Adurial  investigation  of  companies  affairs. — Companies  established 
before  the  Act  must  every  ten  years,  and  every  company  established 
after  the  Act  must  every  five  years,  or  at  such  shorter  intervals  as 
may  be  prescribed  by  the  instrument  constituting  the  company,  or 
by  its  regulations  or  b^'e-laws,  cause  an  investigation  to  be  made 
into  its  financial  condition  by  an  actuary,  and  shall  cause  an  ab> 
stract  of  the  report  of  such  actuary  to  be  made  in  the  form  pre- 
scribed in  the  fifth  schedule  to  the  Act. 

Besides  the  abstract  of  the  acturial  report,  and  within  nine 
months  after  the  accounts  of  a  company  are  made  up  for  the  pur- 
poses of  the  actuary's  investigation,  each  company  is  bound 
[*  385]  to  prepare  a  statement  *of  its  life  assurance  and  annuity 
business  up  to  the  date  of  such  investigation.  Statement  of 
business. — Those  companies  which  have  an  annual  investigation  of 
their  financial  condition  need  not,  however,  send  in  an  annual  state- 
ment but  are  left  free  to  send  it  in  when  and  how  they  like,  at  in- 
tervals not  exceeding  three  years. 

The  form  in  which  the  statement  is  to  be  made  is  prescribed  by 
schedule  6  to  the  Act,  but  may  be  varied  by  the  Board  of  Trade 
under  the  same  circumstances  and  with  the  same  objects  as  the  re- 
quirements of  other  schedules  may  be  altered. 

Abstracts  and  statements  to  be  signed  and  printed. — All  these  state- 
ments and  abstracts  must  be  signed  by  the  chairman  and  to  direc- 
tors and  the  principal  officer  managing  the  life-insurance  business, 
and  by  the  managing  director,  if  any,  and  must  be  printed. 

(1)  The  originals,  with  three  printed  copies,  must  be  deposited 
with  the  Board  of  Trade  within  nine  mbntns  of  the  date  prescribed 
for  preparation  of  the  original,  and  the  Board  of  Trade  must  lay 
annually  before  Parliament  the  statements  and  abstracts  of  reports 
deposited  with  (v)  them  under  the  Act  during  the  preceding  year, 
whether  or  not  they  consider  the  statement,  &c.,  to  be  in  accordance 
with  the  Act  («). 

(2)  Printed  copies  must  be  forwarded  by  post  or  otherwise  on 
application  to  every  shareholder  and  policy-holder  in  the  com- 
pany. 

Act  of  1870  extends  to  a  single  insurer. — The  Liie  Assurance  Com- 
panies Acts  include  life  insurance  by  single  underwriters,  since  by 
the  interpretation  clause  (y)  company  is  explained  as  applying  to 
any  person  or  persons  or  oody  corporate  or  not  incorporate, 
[*  386]  ana  this  wide  definition  therefore  makes  the  ^provisions  of 

;the 

)usi- 


!_      vfuwj  auu   Kuta   niuo  ucuijii/iuii   iiuci^iv/iu    uia&ro  biiu    'piuvioiwuo 

the  Act  apply  to  any  one  or  more  persons  contemplating! 
business  of  life  insurance,  and  practically  excludes  from  such  bi 


(«)  83  &  VH  Vict.  c.  01,  H.  24. 
(«)  85  &  no  Vict.  c.  41,  8.  8. 
(y)  83  &  84  Vint.  c.  61,  s.  2. 

306 


COMPANIES. 


386 


n%ss  the  very  few  cases  in  which  life  assurance  would  or  could  be 
Hiaue  by  underwriters  (z). 

Cmtribvtwn  to  Fire  Brigade. — The  duty  to  contribute  to  the  Fire 
Brigade  rests  as  much  on  a  single  underwriter  as  on  the  great  in- 
surance companies,  if  he  too  takes  fire  risks  (a). 


(2)  Whittingham  v,  Thomborough,  2  Vern.  206,  Prec.  Ch.20. 
shaw,  1  Wm.  Bl.  812,  2  Park  Ins.  (8th  ed.)  934. 
(a)  28  t  29  Vict.  c.  90,  B.  27. 


Rosa  V.  Brad- 


807 


(:    I. 


*388 


THE  LAWS  OF  INSUBANCE. 


[*387] 


♦CHAPTER  XXI. 


RIGHTS  or  POLICY-HOLDERil. 


S3  &  S4.  Vict.  c.  71,  3^  ik  35  Vict.  c.  58,  35  &  36  Vict.  c.  4i.— Un- 
der  the  Life  Assurance  Companies  Acts  (1870, 1871,  1872)  the 
policy-holders  of  any  company,  however  constituted,  are  en- 
titled— 

<^1)  To  copies  of  the  statements  of  business,  assets  and  actuarial 
reports  required  by  these  Acts  to  be  made  (a). 

(2)  To  copies  ot  the  shareholders'  address-book,  on  paying  a  sum 
not  exceeding  6d.  per  100  words  (6). 

(3)  To  printed  copies  of  the  deed  of  statement,  on  payment  of  a 
sum  not  exceeding  28.  6d.  (c). 

Further,  one-tenth  of  the  policy-holders  in  any  insurance  com- 
pany can  stop  all  amalgamation  or  transfer  or  life  insurance 
business  by  or  to  that  company  (d). 

These  n^hts  of  knowing  the  constitution  and  controlling  the 
dealings  ot  an  insurance  company  given  by  statute  are  quite 
independent  of  those  accorded  to  them  by  the  constitution  of  the 
company  itself. 

Policy-holder  is  creditor. — A  policy-holder  in  a  proprietary  com- 
pany is  simply  a  contingent  creditor.      He  is  under  no  liability 
whatever  to  other  policy-holders  or  to  the  company  itself,  since  he 
need  not  even  continue  his  premiums.   Ho  cannot  interfere 
[*  388]  in  the  management  of  the  company,  *except,  perhap?,  to 
restrain  a  violation  of  the  deed  of  settlement  (d). 

Whether  participating  policy-holder  liable  aa  partner. — In  compa- 
nies where  policy-holders  are  allowed  to  snare  in  the  profits, 
participating  policy-holders  are  not  usually  liable  as  contributories 
(e),  since  the  obligation  to  contribute  depends  on  other  considera- 
tions than  sharing  profits,  which  will  alone  not  make  such  persons 
partners  (/). 

Policv-holdera  and  ahareholdera. — Even  where  a  policy-holder 
might  be  treated  by  an  outside  creditor  of  an  insurance  company 

(a)  88  &  84  Vict.  c.  71,  h.  11. 

lb)  Ibid.,  B.  12. 

(c)  Ibid.,  8.  18. 

id)  Ibid.,  B.  14. 

Id)  Aldebert  v.  Lec^f,  1  H.  &  M.  681,  10  L.  T.  N.  S.  185,  13  W  R.  462. 

(e)  Re  English  and  Irish  Church  and  Universitjj  Assurance  Co.,  1  H.  A  M. 
86,  8  L.T.N.  8  724,  11  W.  U.  081. 

(/)  Cox  Y.  Hickman,  8  H.  I..  C.  286.  Bishop  v.  Scott,  7  L.  T.  N.  8.  670. 
Re  English  and  Irish  Church,  Ac,  Socitty,  ubi  supra. 


(AT 


RIGHTS  OP  POLICY-HOLDERS. 


*389 


as  a  partner  in  the  concern,  the  shareholders  cannot  insist  on  his 
contributing  unless  there  is  something  within  the  four  corners  of  the 
deed  of  settlement  to  make  him  so  liable. 

Even  where  a  policy-holder  participates  in  profits,  has  power  to 
vote  at  meetings,  and  on  winding-up  is  entitled  to  the  surplus 
assets  after  the  shareholders  have  been  paid  in  full,  these  are  the 
only  advantages  to  induce  him  to  take  out  a  policy,  and  he  does 
not  by  so  doing,  nor  by  any  ordinary  deed  of  settlement,  make  any 
undertaking  to  contribute  with  the  shareholders  towards  meeting 
the  liabilities  of  the  company  (g). 

Non-liabUity  of  participating  policy-holdera  where  claima  ore  to  he 
charged  on  funds  of  company. — Where  in  a  mutual  insurance 
society  some  of  the  policy-holders  participate  and  others  do  not 
participate  in  the  profits,  but  a  condition  is  indorsed  on  all  policies 
issued  by  the  societ^r,  that  all  claims  are  to  be  limited  to  the  stock 
and  funds  of  the  society,  in  virtue  of  such  condition  the  participat- 
ing policy-holders,  though  they  aie  in  reality  the  only  members  of 
the  mutual  society,  cannot  be  made  to  contribute  (A) 

*Policy-holdersinmutualcompany. — Under  a  mutual  society  [*  389] 
of  the  older  t^pe,  all  policy-holders  were  held  bound  to  con- 
tribute. Marine  mutual  companies  are  of  this  kind  (i).  Certain 
societies  provide  for  gradually  creating  an  insurance  fund,  and  pay- 
ing off  the  original  members  in  favour  of  policy-holders  not  liable. 
Omatruction  of  a  mutual  company. — It  is  assumed  that  the  participa- 
ting policy-holders  will  make  payments  from  time  to  time  in  the 
shape  of  premiums  upon  their  policies,  but  the  basis  of  the  whole 
arrangement  of  this  company,  and  of  any  mutual  insurance  com- 
pany, is  this,  that  there  will  be,  if  not  a  legal  compulsion,  yet 
a  moral  compulsion  on  persons  who  have  commenced  insurances  to 
keep  them  up  and  to  pay  the  premiums  which  must  be  paid  for 
that  purpose.  That  is  the  basis  of  the  contract  and  foundation  of 
the  arrangement  in  a  mutual  company.  Those  who  join  them  know 
that  they  haye  that  security,  and  that  only  for  the  swelling  and  in- 
crease of  the  assets  of  the  company  (^k). 

Policy-holdera  aa  contributora. — Where  a  life  insurance  company 
was  formed  upon  the  mutual  principle,  and  the  articles  of  associa- 
tion provided  that  the  company  should  consist  of  two  classes  of 
memoers — namely,  shareholders  so  long  as  there  should  be  any 
shareholders,  and  insurance  members,  defined  to  mean  policy- 
holders with  participation  in  profits,  and  registered  as  memoers  of 
the  company ;  and  when  the  shareholders  should  be  paid  off  under 


.'.p' 


If;: 


m 


ill 


(g)  Strachan'a  Cate,  10  S.  J.  572  (Alb.  Arb.).  IlummeVs  Case,  IG  S.  J.  65 
(Alb.  Arb). 

(A)  HummeVa  Case,  10  S.  J.  06  (Alb.  Arb.). 

(i)  Reed  v.  Cole,  8  Burr.  1618. 

(k)  IlummeVs  Case,  10  S.  J.  66,  68,  (Alb.  Arb.).  Re  Albion  Life  Ins.  Co.,  16 
Ch.  D.  88, 4»  L.  J.  Ch.  698, 43  L.  T.  N  8.  633,  2»  W  R.  109.  Re  Oreat  Britain 
Mutual  Life,  16  Ch.  D.  247,  4^  L.  T.  N.  S  084,  29  W.  R  202.  Bath's  Case,  11 
Ch.  D.  880,  48  L.  J.  Ch.  411,  40  T.  L.  N.  S.  453,  27  W  R.  068. 

309 


391 


THE  LAWS  OF   INSURANCE. 


the  scheme  provided  for,  then  the  company  was  to  consist  of  assur- 
ance members  only,  it  was  held  that  the  policy-holders  were  con- 
tributories,  but  that  they  could  not  be  called  upon  to  contribute 
until  the  shareholders  had  been  exhausted  (I). 

How  companies'  funds  to  be  applied.    Fund  for  payment  «r 
[*  390]  losses. — "The  capital  stock  of  an  incorporated  insurance  *com- 

fany  is  not  the  primary  or  natural  fund  for  the  payment  of 
ich  may  happen  by  the  destruction  of  the  property  insured. 
The  charter  of  the  company  contemplates  the  interest  on  the  capi- 
tal fund  and  the  premiums  received  for  insurance  as  the  ordinary 
fund  out  of  which  losses  are  to  be  paid.  What  are  surplus  profits. — 
And  the  surplus  of  that  fund,  after  paying  such  losses,  is  surplus 
profits  withm  the  meaning  of  the  charter,  which  surplus  profits 
alone  are  to  be  distributed  from  time  to  time  among  the  stockholders 
(*).  The  unearthed  premiums  received  bv  the  company,  upon 
which  the  risks  are  still  running,  and  which  may  therefore  all  be 
wanted  to  pay  losses  which  may  happen  upon  those  risks,  and  not 
surplus  profits,  which  the  directors  are  authorized  by  the  charter  to 
distribute  among  the  stockholders.  Capital  stock  available  for  extraor- 
dinary losses.  The  capital  stock  of  the  company  if  a  special  fund 
provided  by  the  charter  to  secure  the  assured  against  great  and  ex- 
traordinary losses  which  the  primary  fund  may  be  found  insuffi- 
cient to  meet.  Drafts  on  special  funds  to  be  v\ade  good. — And  if  it  be- 
comes necessary  at  any  time  to  break  in  upon  this  special  fund  to 
pay  such  extraordinary  losses,  it  must  be  made  good  from  the  fu- 
ture profits  of  the  company  before  any  further  dividends  of  those 
profits  can  be  declared. 

Whole  of  premiums,  <fcc.,  must  not  be  divided. — The  directors  of  an 
insurance  company  are  not  justified  in  dividing  all  the  interest  or 
premiums  in  nana  at  the  time  when  a  dividend  is  declared,  but 
should  always  leave  a  surplus  fund  in  addition  to  the  capital  stock 
sufilicient  to  meet  probable  losses  on  risks  undertaken  and  unex- 
pired (m). 

Where  directors  liable  for  undue  distribution  of  funds. — And  if  they 
abuse  their  discretion  by  such  premature  division,  if  an  extraorcl- 
inary  loss  arises,  they  may  make  themselves  personally  liable  where 
the  capital  stock  is  more  than  exhausted  by  the  amount  of  losses. 
If  they  neglect  to  divide  the  profits  without  reasonable  or 
[*  391]  probable  cause,  they  may  be  compelled  to  do  so  *so  long 
as  the  company  is  solvent.  But  after  insolvency  it  would 
be  highly  inequitable  to  take  the  surplus  fund  and  divide  among 


(0  Winatone\i  Case,  12  Ch.  D.  2:".9,  48  L.  J.  Ch. 
W.  R.  753. 


607,  40  L.  T.  N.  S.  838,  27 


(m)  Scott  V.  Eagle  Lis.  Co.,  7  Paige  (N.  Y.  Ch.)  at  203 

'  Policy-holders  who  contributed  to  Rurpliis  fund  are  entitled  to  proportion  of 
profit!),  even  if  they  do  not  continue  to  bo  policy-holden  at  period  ot  distpbutioii. 
Smith  V.  JIunterdown  County  Mtit.  F.  Inn  Co ,  41  N.  J.  Eq.  478.  See  Carlton 
▼.  Southern  Mut.  Ins.  Co.,  72  Ga.  371. 

310 


RIGHTS  OF  POLICY-HOLDERS. 


*392 


the  stockholders,  and  Jeave  the  insured,  whose  yremiums  had  in- 
creased that  fund,  to  sustain  a  loss  (n). 

Might  of  interference  where  offain  of  company  mismanaged. — A 
policy-holder  has  not  the  least  right  to  interfere  with  anything 
whatever  which  is  done  under  the  provisions  of  tlie  deed  of  settle- 
ment, even  in  the  case  of  the  funds  being  invested  on  any  improper 
investments,  and  it  would  be  most  mischievous  to  allow  any  such 
interference  on  his  part  with  the  management  of  the  business  by 
the  directors.  But  if  the  funds  of  the  company  are  about  to  be  ap- 
plied wholly  regardless  of  the  deed  of  settlement,  he  is  entitled  to 
ask  the  court  to  restrain  such  application.  But  to  enable  liim  to 
do  BO,  there  must  be  clear,  distinct,  and  positive  injury  threatened 
to  the  fund  which  was  available  for  his  claim  (o). 

From  what  time  'policy-holder' 8  charge  on  company''s  funds  operates. — 
A  policy-holder's  charrr*  if  any,  on  the  funds  of  the  company 
which  has  granted  the  policy,  does  not  operate  on  the  fund  charged 
at  the  date  of  its  issue,  but  at  the  moment  when  it  becomes  a  claim, 
otherwise  no  dividend  could  ever  be  declared.  When  it  does 
become  a  claim,  it  takes  priority  from  the  date  when  it  became 
such,  not  from  the  time  when  it  was  payable. 

Wficn  company^s  liability  arises. — In  a  re-insurance  life  policy  the 
lialjility  arises  on  proof  of  death  and  of  payment  by  the  insurers 
under  their  original  policy  (p). 

Right  to  receiver. — Even  wlien  there  is  no  charge,  it  seems  the 
policy  will  give  a  right  to  a  receiver  (q),  but  not  give  priority  over 
general  creditors  (r). 

'^Suit  maintainable  by  policy-holder  in  mutual  society  for  con-  [*  392] 
tribution  to  his  loss. — A  suit  in  equity  can  be  maintained  by 
a  member  of  a  mutual  insurance  society  against  the  managing 
committee  to  recover  by  a  contribution  among  the  members  the 
amount  of  his  loss  (»). 

Liability  of  company  to  policy- holders.  IIow  limited. — The  liability 
to  policy-holders,  «fec.,  may  be  limited — 

(1)  By  the  constitution  of  the  company. 

(2)  By  particular  provisions  in  the  policy. 

Where  the  limitation  is  effected  bv  (1),  no  notice  thereof  need 
appear  on  the  policy,  since  all  who  deal  with  companies  are  now 

(n)  Scott  V.  Eagle  hia  Co.,  7Paigo  (N.  Y.Ch.)  188,  208.  See  Nicholson  v. 
Nicholson,  9  W.  11. 67". 

(«)  Aldebert  v.  Leaf,  1  H.  &  M.  681,  10  L.  T.  N.  S.  185,  12  W.  11.  462,  8 
N.  R.  456. 

(p)  Kx  parte  Piince  o(  Wales  Society,  Johnson  633,  28  L.  J.  Ch.  335,  32  L.T. 
195,  7  W.  11.  137,  300. 

(q)  Law  V.   London  Indisputable,  I  K.  &  J.  223,  24  L.  J.  Ch.  196,  22  L.  T 
20W,  8  W.  R.  165,  1  Jur.  N.  S.  170.     Re  Athenceuni  Fife,  Ex  parte  Eagle  Co.,  4 
K.  &  J.  549,  27  L.  J.  Ch.  829,  tt  W.  R.  779. 

(r)  Re  State  Fire,  1  De  O.  J.  &  8.  634,  84  h-  J.  Ch.  436,  8  L.  T.  N.  S.  146, 
11  W.  R.  ion.  Re  English  and  Irish  Church  Co,  1  H.  &  M.  85,  11  W.  R. 
681,  8  L.  T.  N.  S.  724. 

(b)  Hutchinson  v.  Wright,  26  Boav.  444.  Robson  v.  M'Creight,  IJcuv.  272,27 
L.  J.  Ch.  471,  ai  L.  T.  21,  «  W.  IV  886,  4  Jur.  N.  S.  269. 

811 


!■; ,.  i'_ . 


' i.tii 


*393 


THE  LAWS  OF  INSURANCE. 


deemed  to  have  notice  of  their  constitution.  And  when  a  company 
alters  itself  duly  from  an  unlimited  to  a  limited,  as  may  now  be 
done  under  the  provisions  of  the  Ciompanies  Act,  1862,  it  becomes 
thenceforth  needless  to  insert  any  provision  in  the  policv,  the  ad- " 
dition  of  the  word  "  limited  "  to  its  style  being  sufl&cent.  Moreover, 
in  case  of  such  change  provisions  in  the  deed  of  settlement  as  to 
inserting  such  limitation  in  the  policies  become  superfluous  and 
can  be  struck  out. 

Liability  of  ahareholders  and  funds  may  be  limited  by  policy. — By  the 
Companies  Act,  1862,  s.  38,  sub-s.  6,  it  is  provided  that  nothing 
within  the  Act  shall  invalidate  any  provision  in  a  policy  or  other 
insurance  contract  limiting  the  liability  of  individual  members  on 
such  policy,  or  making  the  funds  of  the  company  alone  liable  in 
respect  of  such  policy  or  contract  (t). 

In  all  policies  it  is  usual,  if  not  invariable,  and  except  in 
I*  393]  limited  companies  necessary,  to  stipulate  that  the  '^funds 
of  the  insurance  company  shall  alone  be  liable,  and  that 
individual  shareholders  shall  be  excepted  from  all  personal  liability. 
Funds  include  unpaid  m/fe.— Unpaid  calls  come  within  the  defini- 
tion of  funds  (x).  When  liability  is  limited  to  the  funds,  it  means 
to  the  funds  as  they  ought  to  be  made  up,  and  includes  the  still 
unpaid  portion  due  on  shares  taken  {y). 

Ldabiuty  undertaken  by  policy  ultra  vires. — ^The  Hull  and  London 
Fire  Assurance  Company  was  registered  under  7  &  8  Vict.  c.  110. 
Its  deed  of  settlement  took  power  to  grant  marine  insurances,  but 
clause  77'thereof  specially  required  that  the  funds  of  the  company 
should  alone  be  made  liable,  and  s.  44  of  the  Act  that  policies 
should  be  signed  by  two  directors  or  an  officer  expressly  authorized 
thereto  by  resolution  applying  to  the  particular  case.  A  policy 
issued  without  any  qualincation  as  to  liability  was  held  ultra  vires, 
and  such  as  could  not  be  granted  either  by  the  directors,  or  any 
agent  appointed  b^  them  (z),  and  nothing  could  be  recovered 
thereon,  fiut  possibly  the  grantee  may  inti^ist  on  having  proper 
and  intra  vires  policies  granted  to  him  (a).  Ami  in  support  of  this 
view  it  may  be  observed  that  a  memorandum,  signed  by  three  di- 
rectors, stipulating  that  on  receipt  of  certain  premiums  the  com- 
pany would  guarantee  an  assurance,  and  issue,  if  required,  a 
stamped  policy  in  the  authorized  form,  lias  been  held  binding  on 
the  company  and  to  create  a  good  equitable  debt  (/>). 

(t)  Seo  per  Jessel,  M.  R.,  Re  Accidental  Death  Co.,  7  Ch.  D.  608,  47  L.  J.  Ch. 
396,  26  W.  R.  478. 

(a;)  Bowes  v.  Hope  Sodety,  11  H  L.  C.  889,  397,  per  Lord  Westbury.  (hah- 
Ian' a  Case,  17  S.  J.  127. 

iy)  Emm  v.  Coventry,  b  De  G.  M.  &  G.  911,  2  Jur  N.  S.  557,  25  L.  J.  Cli. 
489,  4  W.  R.  466,  affd.  8  De  G.  M.  &  G.  885,  3  Jur.  N  8. 1225, 26  L.  J  Ch.  4(X), 
6  W.  R.  436. 

^2!)  Hambro  v.  Hull  and  London  FHre  Co.,  8  H.  &  N.  789,  28  L.  J.  Ex.  62. 

(a)  Ibid.  Penley  v.  Beacon  Fire  Co.,  7  Grant  (U.  C.)  130.  Wright  v.  Lon- 
don, .fcc,  Co.,  5  Canada  (8.  C)  46'}. 

(6)  In  Re  Athenmim  Life  Co.,  Ex  parte  Eagle  Co.,  4  K.  &  J.  549,  25  L.  J. 
Ch.  829,  5  Jur.  N.  S.  1140,  6  W.  R.  779. 

312 


Iv^  I 


RIGHTS  OF  POLICY-HOLDERS. 


*395 


394] 


Where  no  debt  can  be  established  and  the  contract  *is  [* 
wholly  vMra  vires,  being  on  risks  not  allowed  by  the  articles, 
policy-holders  cannot  claim  as  creditors,  but  only  for  premiums 
paid  (c). 

Policy-holder  cannot  control  property  or  funds. — The  grantees  of 
policies  insurance  bargain  to  receive  a  sum  of  money  to  be  paid  in 
a  future  event.  Whatever  may  be  the  property  possessed  by  the 
grantors,  the  grantees  have  not  by  this  contract  any  immediate 
control  over  it,  or  lien  upon  it.  The  grantors  or  their  trustees  coi  - 
tinue  to  have  the  entire  control  or  management  over  the  whole 
fund.  The  real  estate  or  chattels  real  may  be  sold  and  converted 
into  pure  personalty,  and  pure  personalty  may  be  converted  into 
chattels  real,  and  this  state  of  things  may  continue  not  only  during 
the  contingency  upon  which  payment  depends,  but  after  the  con- 
tingency has  determined,  for  the  grantee  acquires  no  specific  lien 
after  the  payment  has  become  due.  Even  in  default  of  payment 
when  due,  the  grantee  cannot  by  reason  of  such  default  only  resort 
immediately  and  at  once  to  chattels  real,  but  must  resort  to  legal 
process,  which  will  not  affect  the  land  possessed  by  the  insurers  at 
the  time  of  the  contract,  although  it  may  in  its  final  result  affect 
such  land  as  the  office  may  have  at  the  time  when  the  process  is 
executed.  Ordinarily  the  grantee  has  nothing  but  a  right  of  action 
from  the  date  of  the  contract  until  payment  (d). 

Policy-holder  not  secured  creditor. — From  this  it  results,  on  the  one 
hand,  that  a  policy  is  not  within  the  Mortmain  Acts,  and  on  tho 
other  that  a  policy-holder  under  such  a  policy  would  not  be  a  se- 
cured creditor  in  case  of  liquidation. 

Provision  in  policy  creating  a  charge  from,  proof  of  death. — But  where 
a  life  policy  was  granted  stipulating  that  the  funds  remaining  at  the 
time  of  any  claim  or  demand  unapplied  an  undisposed  of, 
and  inapplicable  to  prior  ^demands,  should  bo  liable  to  [*  395] 
answer  the  demand,  and  negativing  individual  liability  on 
the  part  of  the  directors,  it  was  held  that  this  constituted  a  charge 
on  tne  funds,  and  that  it  took  priority  from  the  date  of  proof  of 
death  although  not  payable  until  three  months  later  (e). 

Company  not  a  trustee  of  policy  money  on  death  of  assured  who  has 
assigned. — An  insurance  company  which  has  granted  an  ordinary 
policy  of  life  insurance  is  a  debtor,  and  an  assignee  of  such  policy 
becomes,  on  the  death  of  the  life  insured,  a  creditor  of  the 
company.  The  company  is  not  in  such  case  a  trustee  or  a  stake- 
holder, and  should  not  pay  the  policy  money  into  court  under  tho 
Trustee  Relief  Act  (/). 

What  amounts  to  covenant  to  pay  out  of  particular  funds. — No  pre- 

(c)  Re  Phoenix  Life,  Burgess  and  Stock^s  Case,  3  J.  &  H.  441,  31  L.  J.  Ch 
749,  10  W.  R.  810. 

(a)  March  v.  Attorney  General,  5  Beav.  433,  per  Lord  Langdule. 

(c)  Re  Athenasum  Life,  «{rf.,  Co.,  Ex  parte  l*rince  of   Wales  Co.,  Johnson 
688,  28  L  J.  Ch.  8 '6,  32  L.  T.  195,  7  W.  R.  137,  800 

(/)  Matthew  v.  Northern,  &c.,  Co ,  9  Ch.  D.  80,  38  L.  T.  N.  S.  408,  46  L.  J. 
Ch.  602.    D&sborough  v.  Harris,  G  De  G.  M.  &  O.  489. 

olo 


i! 


E  jl 


,,-(. 


.,:  J,i; 


396 


THE  LAWS  OP  INSURANCE. 


cise  or  technical  words  are  necessary  to  create  a  covenant ;  and 
whether  it  be  so  or  not  depends  on  the  intention  of  the  parties,  and 
therefore  where  directors  had  stipulated  that  neither  of  them  aa 
directors  should  be  liable  to  any  demand  for  loss,  except  under  the 
articles  of  the  society,  it  was  held  that  the  instrument  might  be 
considered  as  a  covenant  to  entitle  the  insured,  in  case  of  a  loss  by 
fire,  to  receive  a  remuneration  out  of  the  funds  of  the  society  to  the 
extent  of  such  funds  (g). 

"  The  capital  stock,"  "  the  capital  stock  and  funds,"  "  the  stock 
and  funds,"  "  the  capital  stock  and  effects,"  with  or  without  refer- 
ence to  prior  claims,  or  limitation  of  the  charge  to  the  amount  of 
such  capital  stock  funds  or  eflfects  undisposed  of  and  inapplicable  to 
prior  claims  under  the  constitution  of  tne  company,  are  variously 

made  liable  in  the  policies  of  unlimited  companies  (A). 
[*  396]  No  charge  is  created  on  the  funds  of  a  company  by  *the 
terms  of  a  policy  which  makes  the  stock  and  funds  of  the 
company  liable  alone.  Policy  making  funds  solely  liable  does  not 
create  charge,  and  holders  rank  with  general  creditors. — Consequently 
the  holders  of  such  policies  have  no  claims  on  the  assets  of  the 
company  in  preference  to  general  creditors  (i). 

Ejfect  of  provision  that  funds  shall  make  good  specified  sums. — A  pro- 
vision in  a  policy,  that  the  capital  stocks  and  funds  of  the  said 
company  shall  be  subject  and  liable  to  make  good  the  aforesaid 
sum  of  £  to  the  assured,  his  heirs,  executors,  or  assignees, 
means  that  the  money  shall  be  paid — i.  e.,  that  the  stock  shall  be 
applied  in  the  payment,  or  that  the  company  shall  pay  it  out  of 
the  stock — it  does  not  amount  to  an  equitable  assignment  of  the 
stock,  but  is  merely  a  covenant  to  pay  out  of  stock  so  far  as  it  will 
go  ik). 

Where  policy  restricts  claims  to  "property  of  company,  shareholder  cant 
he  sued. — Where  a  policy  restricts  claims  under  it  to  the  property  of 
the  company  remaining  at  the  time  of  any  claim,  including  unpaid 
capital  and  speciallv  excepts  all  individual  liability,  the  assured 
cannot  proceed  at  law  against  an  individual  shareholder ;  and  it 
will  not  help  the  policy-holder  that  the  deed  of  settlement  con- 
tains (if  it  does)  terms  more  favourable  to  the  assured  than  the 
policy  does,  nor  that  the  capital  stock  is  fraudulently  overstated  in 
the  policy  (0- 

So  also  wiiere  iho  liability  is  imposed  upon  the  funds  remaining 
unapplied  and  indisposed  of  and  inapplicable  to  prior  claims  (m). 

Idability  limited  by  policy  can't  be  extended  by  action  for  breach  of 
contract. — Where  the  liability  of  shareholders  in  an  insurance  com- 

(wi)  Ro  Alhenceum  Life,  Ex  parte  Prince  of  Wales  Life,  supra,  note  (e). 

(a)  Andrews  v.  Ellison,  (i  Moore  (C.  P.)  199. 

(A)  Re  State  Fire,  U  L.  T.  N.  8. 108. 

(t)  Re  State  Fire,  U  L.  T.  N.  S.  108  ;  and  see  Ro  International  Life,  M" Tver's 
Claim,  5  Ch.  App.  4M,  21  L.  T.  N.  S.  88,  i8  W.  R.  794. 

{k)  Matthew  v.  Northern,  0  Ch.  D  80,  84,  38  L.  T.  N.  S.  408,  4.1  L.J. 
Ch.  562. 

{I)  Durham's  Case,  4  K.  &  J.  517  (1808.) 

314 


RIGHTS  OF  POLICY-HOLDERS. 


398 


m 


pany  is  by  provisoes  in  the  policy  limited  (in  case  of  insolvency)  to 
the  amount  then  unpaid  in  such  shares,  the  policy-holders  cannot, 
by  bringing  action  for  breach  of  contract,  in  eflfect  make  the 
liability  *unlimited  (n).  To  do  so  would  enable  persons  [*  397] 
who  have  contracted  to  seek  their  claims  from  a  certain 
limited  fund  to  enforce  them  agninst  another  and  unlimited  fund. 
Policy-holderfl  under  such  policies  have  no  personal  remedy  (o). 

Where  liability  limited  by  poliey,  covenanted  to  indemnify  is  also  lim- 
ited.— Where  such  is  the  case  a  covenant  to  indemnify  is  not  un- 
limited in  its  scope,  and  does  no  more  than  bind  and  affect  the 
paid  and  unpaid  capital  of  the  indemnifying  insurer  (p). 

Nor  can  the  policy-holders  get  the  costs  of  winding  up  out  of 
contributories  who  have  compounded  under  s.  160  of  the  Act  of 
1862  and  the  Rules  of  1862,  sched.  iii.,  form  56  (g). 

Funds  appropriated  to  secure  policy-holders  mud  be  reserved  for  them. 
Costs  of  getting  in  funds  appropriated  to  policy-holders  to  be  borne  by 
shareholders. — If  the  liability  of  shareholders  be  limited  by  the 
policies  (or  in  other  manner  whereof  the  policy-holders  have  no- 
tice) to  the  subscribed  capital  of  the  company,  the  funds  thereby 
indicated  must  be  kept  entirely  for  the  policy-holder  (r),  and  the 
costs  of  getting  in  the  unpaid  capital,  which  is  hypothecated  in  this 
manner  to  the  claims  of  the  policy-holders,  will  fall  not  on  them, 
but  on  the  shareholders,  since  such  costs  are  really  costs  of  settling 
the  matter  between  the  joint-stock  partners  themselves  (s). 

♦But  the  policy-holders  cannot  insist  on  further  calls  after  [*  398] 
exhaustion  of  assets  to  recoup  them  for  assets  spent  in  pay- 
ing general  creditors,  neither  will  they  be  postponed  to  general 
creditors,  but  will  rank  with  them  (0- 

The  deed  of  settlement  of  the  Albion  Insurance  Company  pro- 
vided that  before  any  dividend  was  declared  a  reserve  of  not  less 
than  two  per  cent,  of  the  annual  interest  of  the  sums  advanced 
should  be  appropriated  until  the  whole  capital  (of  £1,0(X),000) 
should  be  raised  as  a  permanent  fund  to  provide  against  losses. 


\l 


(n)  Lethbridge  v.  Adams,  13  Eq.  547,  26  L.  T.  N.  S.  147,  20  W.  R.  352. 

(o)  Re  Professional  Life,  3  Ch.  Anp.  167,  17  L.  T.  N.  S.  631,  36  L,  J.  Ch. 
442,  16  W.  R.  295.  Re  Athenamm  Life,  3  De  G.  &  J.  660.  Durham's  Case, 
4  K.  &  J.  517.  BelVs  Case,  l)  Ea.  706-712,  39  L.  J.  Ch.  639,  18  W.  R.  784. 
Evans  v.  Coventry,  8  De  G.  M.  &  G.  8H5,  26  L  J.  Ch.  400,  5  W.  R.  436.  King 
V.  Accumulative  Life  Co.,  3  C.  B.  N.  S.  161.  163,  27  L.  J.  C  P.  57,  30  L.  T.  119, 
6  W.  R.  12.  Aldebert  v.  Leaf,  I  H.  &  M.  681, 10  L.  T.  N.  S.  185.  12  W.  R.  462. 
Hallett  V.  Dowdall,  '8  Q.  B.  2,  16  Jur.  462. 

(p)  Frere's  Case,  16  S.  J.  603,  per  Lord  Cairns,  disapproving  Fleming's  Case, 
but  Fleming's  Case  is  of  judicial  authority. 

(q)  Re  Accidental  Death  Co.,  7  Ch.  D.  568,  47  L.  J.  Ch.  397,  25  W.  R  473. 

(r)  Re  Professional  Life  Co.,  ubi  supra.    Hallett  v  Dowdall,  ubi  supra. 

Is)  Re  Aqricidturist  Cattle  Insurance  Co.,  10  Ch.  App.  1,  44  L.  J.  Ch.  108,  31 
L.  T.  N.  S."  710,  21  W.  R.  219.  Re  Arthur  Average  Co ,  No  2,  24  W.  R.  514. 
Re  Professional  Life  Co.,  3  Ch.  Apn.  167,  36  L.  J.  Ch.  442,  17  L.  T.  N.  S.  631, 
16  W.  R.  295,  1867.    Re  London  Marine  Ins   Co.,  8  Eq.  176,  17  W.  R.  784. 

(0  Re  English  and  Irish  Church  Co.,  20  L.  T.  N.  S.  943,  8  L.  T.  N.  8.  724, 
1  H.  &  M.  79,  11  W.  R.  681.  Re  iitate  Fire  Co.,  11  W.  R.  746,  1011,  24  L.  J. 
Ch.  486,  1  De  G.  J.  &  »  034,  8  L.  T.  N.  S.  146. 

315 


ir  il 


• ''I. « 


399 


THE   LAWS  OF  INSURANCE. 


The  funds  were  accumulated,  though  no  reserve  fund 'was  actually 
set  apart,  and  bonuses  were  triennially  divided.  Reserve  fund  m 
capital. — The  Albion  amalgamated  with  the  Eagle,  and  each  share- 
holder was  given  the  option  of  receiving  £50  a  share,  or  having  an 
allotment  of  shares  and  receiving  a  share  of  the  surplus  assets. 
Bonus  therefrom  is  income, — It  was  held,  in  a  question  on  a  settle- 
ment comprising  some  Albion  shares,  that  the  share  of  the  surplus 
assets  was  capital,  since  the  surplus  assets  were  a  reserve  fund,  and 
not  income,  though  the  triennial  bonus,  coming  out  of  the  same 
fund,  seems  to  have  been  treated  as  income  (u). 

Bonus  chargeable  toith  income  tax. — And  where  a  life  insurance 
company  issued  "  participating  policies,"  according  to  the  terms  of 
which  the  gross  profits  of  such  policies  were  divided  quinquen- 
nially  as  foUows — viz.,  two-thirds  to  the  holders  of  such  policies 
then  in  force,  and  the  remaining  third  to  the  company,  which  bore 
the  whole  expenses  of  the  business — ^the  portion  remaining  after 
payment  of  expenses  constituting  the  only  profit  available  for 
diAdsion  amongst  the  shareholders,  the  House  of  Lords  decided 
(Lord  Bramwell  dissenting)  that  the  two-thirds  returned 
[*  399]  *to  the  policy-holders  were  "  annual  profits  or  gains,"  and 
assessable  to  income  tax  (x). 

Payment  must  be  made  before  winding  up,  to  avoid  fraudulent  prefer- 
ence.— Where  a  claim  on  a  policy  was  sent  in  with  proofs  and  ad- 
mitted, and  a  day  fixed  for  payment,  but  before  that  day  a  petition 
was  presented  for  the  winding-up  of  the  company,  upon  which  after 
several  adjournments  a  winding-up  order  was  seven  months  subse- 
quently made,  Lord  Romilly  held  that  payment  by  the  company 
of  the  claim  must  be  deemed  a  fraudulent  preference  within  s.  153 
of  the  Companies  Act,  1862,  and  that  the  money  must  be  refund- 
ed (3/). 

In  other  words,  it  is  not  enough  that  the  right  to  the  policy- 
moneys  should  have  accrued.  Payment  must  be  made  before  any 
winding-up  proceedings  (z). 

Annuitants  are  creditors  from  day  annuity  begins  to  run. — Holders 
of  annuities  granted  by  insurance  companies  are  creditors  of  the 
company  from  the  day  when  the  annuity  begins  to  run.  The  lia- 
bility of  the  company  may  be  limited  by  ite  constitution  or  the 
terms  of  the  annuity  deed :  and  whether  the  annuity  is  a  secured 
debt  or  not  depends  on  like  considerations.  They  can  of  course 
prove  in  the  liquidation  of  the  company  for  the  value  of  the  an- 
nuity (a)  which  is  to  be  computed. 

Fund  set  apart  for  immediate  claims. — Where  a  trust  fund  is  set 
apart  by  a  company  to  meet  immediate  claims  on  policies,  &g  ,  it 


S^ 


(u)  Nicholson  v.  Nicholson,  9  W.  R.  677. 

(«)  LoHt  V.  London  Assurance  Corporation,  10  App.  Cas.  438,  55  L.  J.  Q.  B. 
92,  53  L.  T.  634,  34  W.  R.  238. 
(y)  Browne's  Case,  16  S.  J.  781  (1874). 
(z)  Martin's  Claim,  14  Eq    148. 
(a)  Hunt's  Case,  1  H.  &  M  79,  7  L.  T.  JI.  S.  069,  11  W.  R.  225. 

316 


RIGHTS  OP  POLICY-HOLDERS. 


*401 


covers  only  those  claims  and  demands  which  have  so  matured  that 
immediate  payment  can  be  demanded  and  an  action  at  law  brought, 
or  other  immediate  steps  taken  to  obtain  payment.  An  annuity 
which  had  matured,  but  en  which  no  installments  were  due  within 
the  time  limited  for  immediate  payments,  will  not  rank  on  such 
fund  (fe). 

*Loan  by  office  on  security  of  land  and  policy,  value  of  policy  [*  400] 
eanH  be  set  off  against  debt. — A  man  who  borrowed  irom  au 
insurance  company  on  the  security  of  a  policy  granted  by  them 
and  of  a  charge  on  land,  on  the  liquidation  ot  the  company  was 
held  liable  to  the  assignees  of  the  debt  and  securities  for  the  amount 
of  the  loan,  and  unable  to  set  off  the  value  of  the  policy,  or  to  claim 
indemnity  in  respect  of  subsequent  depreciation  of  the  policy,  the 
assignees  being  ready  to  return  all  the  securities  given  for  the  debt 
on  receiving  payment  thereof  (c). 

Value  of  policy  canH  be  set  off  against  loan  on  it  in  liquidaticm  of  com- 
pany.— Nor  if  a  man  borrows  on  his  policy  can  he  set  off  the  value 
thereof  against  the  loan  in  the  liquidation  of  the  insurance  com- 
pany (d)-  B'lt  under  the  present  law  a  policy  has  an  ascertainable 
value  in  liquidation  (e). 

Value  of  policy  can't  be  set  off  on  bankruptcy  of  policyholder  against 
ban  on  security  of  policy. — The  sum  at  which  a  policy  has  been  val- 
ued in  the  winding-up  of  an  insolvent  insurance  company  is  not 
a  debt  due  within  the  mutual  credit  clause  of  the  Bankruptcy  Act, 
1869,  8.  39  (unaltered  in  the  Act  of  1883,  vide  a.  38)  (/),  and  there- 
fore cannot  be  set  off  under  the  bankruptcy  of  a  policy-holder 
against  a  loan  made  to  him  on  the  policy. 

Limited  liability  to  policy-holders  does  not  affect  general  creditors. — A 
limit  placed  on  the  liability  to  policy-holders  by  the  deed  of  settle- 
ment, does  not  in  any  way  afiect  the  rights  of  general  creditors, 
who  will  have  in  such  a  case  the  unlimited  liability  of  the  share- 
holders, and  not  be  restricted  to  the  capital  of  the  company,  if  the 
company  be  not  a  limited  liability  (^). 

Rights  of  annuitants  and  non-participating  policy-holders  depend  on 
their  contracts. — The  rights  of^  annuitants  and  non-participating 
policy-holders  depend  on  the  presence  or  absence  of  limitation  or 
qualification  in  the  annuity  contracts  or  policies  accepted  by 
them  (h). 

*  Questions  arising  on  winding  up. — In  the  winding  up  of  [*  401] 
an  insurance  company,  the  important  questions  for  consid- 
eration are— 

(6)  Wi/atfs  Case,  Reilly  (Alb.  Arb.)  42. 

(c)  BoMHieV"?  Caw,  Reilly  (Alb.  Arb)  44. 

(d)  Parity  a  Case,  Reilly  (Alb.  Arb.)  48. 

(e)  Life  Assurance  Companies  Act,  1870. 

(/)  Ex  parte  Price,  Re  Lankester,  23  TV.  R.  844,  88  L  T.  N.  S.  187. 

ig)  Re  Accidental  Death  Co ,  7  Ch.  D.  f>68,  47  L.  J.  Ch.  896,  25  W.  R.  478. 

(A)  Re  Kent  Xutual  Company,  Hummed  a  Caae,  16  S.  J.  65,  68  (Alb.  Arb.)* 

817 


r    1 


Ifi     i; 


«.  '<:\ 


i  >  iilli'lfc 


*401 


THE  LAWS  OF  INSURANCE. 


(1)  The  number  of  matured  claims  or  contracts  on  which  a 
present  liability  exists. 

(2)  The  number  of  immature  claims  whereon  the  liability  ig 
still  contingent. 

(3)  Whether  all  claims  are  payable  out  of  the  Rame  funds. 

(4)  If  not,  whether  any  claims  are  secured  or  come  in  only  with 
claims  df  general  creditors. 

How  claims  valued. — Under  the  present  law  in  the  winding  up  of 
an  insurance  company — (1)  matured  claims  or  policies  are  valued 
at  the  amount,  including  accrued  bonus,  which  was  payable  on 
them  at  maturity ;  (2)  immature  claims  are  valued  in  accordance 
with  the  first  schedule  to  the  Life  Assurance  Companies  Act,  1870; 
(3)  annuity  contracts  are  valued  under  the  second  schedule  of  the 
same  Act. 

Reduction  of  contracts  in  lieu  of  winding  up. — By  the  Life  Assur- 
ance Companies  Act,  1870  (i),  the  Court,  in  the  case  of  a  company 
which  has  been  proved  to  be  insolvent,  may,  if  it  thinks  fit,  reduce 
the  amount  of  the  contracts  of  the  company  upon  such  terms  and 
subject  to  such  conditions  as  the  Court  thinks  just,  in  place  of  mak- 
ing a  winding  up  order  (k). 

(t)  33  &  34  Vict.  c.  61,  s.  22. 

(k)  Be  Britoto  Medical,  Jkc-,  Co.,  54  L.  T.  14. 


318 


tiOVATION  AND  AMALGAMATION. 


403 


♦CHAPTER  XXII. 


NOVATION   AND  AMALGAMATION. 


[*402] 


Definition.— By  novation  is  meant  a  tripartite  arrangement 
whereby  a  debtor  or  person  liable  presently  or  in  future,  or  on  a 
contingency  or  concurrence  of  contingencies,  is  released  from  such 
debt  or  liability  in  consideration  of  his  providing  another  person 
who  will  undertake  to  satisfy  such  debt  or  liability  (a).  Difference 
between  novation  and  mretyahip. — The  creditor,  by  consenting  to 
such  arrangement,  consents  to  look  only  to  the  new  debtor ;  and  it 
is  the  criterion  between  novation  and  suretyship  that  in  the  former 
the  creditor  has  no  right  of  recourse  to  his  original  debtor  (6),  hav- 
ing accepted  the  new  liability  in  complete  extinction  and  satisfac- 
tion of  the  old,  whereas  in  suretyship  the  liability  of  the  original  or 
principal  debtor  continues. 

Novation  to  be  proved. — The  law  will  not  presune  novation  (c). 
It  is  a  question  of  fact,  and  must  be  proved  accoi  din»ly  bv  those 
who  aver  it  to  have  taken  place  (d).  In  the  absence  of  such  proof 
the  new  liability,  if  any,  will  be  taken  to  be  by  way  of  guarantee 
(e),  and  not  as  a  substitute  for  the  old. 

Proof  required. — Although  very  slight  evidence  is  sufficient  in  the 
course  of  dealing  between  a  customer  and  a  firm,  subject  to 
change  by  the  retirement  of  old  partners  and  the  introduction  of 
new,  to  show  that  the  customer  continuing  his  dealings  ac- 
cepts the  new  firm  as  his  debtors  *in  lieu  of  the  older  firm  [*  403] 
(though  even  when  it  is  necessary  that  knowledge  of  the 
change  in  the  firm  should  be  brought  home  to  the  creditors),  far 
more  precise  and  cogent  proof  is  required  to  show  that  in  the  case 
of  two  limited  liability  companies,  formed  originally  under  separate 
deeds,  a  creditor  has  abaraoned  a  written  definite  contract  with 
one  company  for  an  unwritten  engagement  by  a  new  company,  to 
be  arrived  at  through  the  medium  of  very  special  arrangements 
between  the  two  companies  (/). 

Novation  not  solely  applicable  to  insurance. — The  doctrine  of  nova- 
tion does  not  apply  solely  to  insurance,  but  owing  to  the  recent 

(a)  1  Pothier  (Evans'),  p.  881,  546.     Wilson  v.  Lloyd,  16  Eq.  60. 

(ft)  1  Pothier  (Evans'),  p.  894,  s.  568. 

(c)  85  &  36  Vict  c.  41,8.  7.     Bowring^s  Case,  16  S.  J.  306. 

id)  Coghlan's  Case,  Reilly  (Eur.  Arb.)  46,  17  S  J.  128.  BlundelVs  Case, 
Reilly  (Eur.  Arb.)  84,  17  S.  J.  594. 

(e)  Erskine's  Scottish  Law  425. 

(  f)  Re  Family  Endowment  Co.  per  Hatherly,  C  ,  5  Ch.  App.  118,  132-3,  89 
L.  i.  Ch.  806,  21  L.  T.  N.  S.  776,  18  W.  R.  266. 

319 


f 


(Jv'-l';; 


M: 


*404 


THE  LAWS  OF  INSURANCE. 


history  and  peculiar  character  of  insurance  business,  has  been 
chiefly  discussed  of  late  years  with  reference  to  insurance  com- 
panies, having  been  brought  into  prominence  by  the  result  of 
numerous  and  complicated  amalgamations  and  transfers  of  busi- 
ness between  insurance  companies  which  were  in  difficulties  at  the 
time  of  such  amalgamations  and  ultimately  became  insolvent. 

But  many  canes  have  arisen  oat  of  arrangements  of  insurance  con' 
panics. — A  large  number  of  companies,  by  a  series  of  successive 
amalgamations  and  transfers,  were  ultimately  merged  in  the  Euro- 
jiean  and  Albert  Companies  respectively,  and  both  failed,  upon 
which  it  became  necessary  to  decide — (1)  the  competency  of  the 
various  companies  'jo  effect  the  said  amalgamations  and  transfers; 
(2)  whether  such  proceedings,  if  competent  to  the  company,  were 
binding  on  its  policy-holders  and  other  creditors;  (.3)  whether,  if 
not  binding,  they  had  been  accepted  and  acted  upon  by  creditors. 

These  questions  are  dealt  with  in  the  following  pages  on  nova- 
tion and  amalgamation. 

Amalgamation. — By  amalgamation  or  transfer  is  meant 
[*  404]  those  *arrangements  between  insurance  companies  on  occa- 
sions when  one  takes  to  the  business  of  the  other  (g). 

Amalgamation  ultra  vires. — Purchase  by  one  insurance  company 
of  the  goodwill  and  the  whole  concern  of  another  will,  ordinarily 
speaking,  be  a  transaction  lii  which  no  insurance  company  will  be 
justified  in  engaging,  because  it  certainly  cannot  be  said  to  be 
within  the  ordmary  scope  of  the  objects  of  any  company  to  pur- 
chase the  goodwill  of  another  (h).  ^uch  a  transaction  may,  how- 
ever, be  expressly  authorii,ed  under  the  deed  of  settlement  or  other 
instrument  constituting  the  company,  ])ut  the  purchase  must  be 
carried  out  according  to  the  provisions  thereof  (i). 

Capacity  to  amalgamate  must  be  expressly  shown, — Power  to  enter 
into  a  contract  of  amalgamation  is  most  clearly  no  part  of  the 
general  powers  which  the  law  would  imply  in  directors  of  an  in- 
surance company  (^k).  The  power  to  insure  lives  and  the  power  to 
.;rant  annuities  on  lives  committed  to  the  directors  of  an  insurance 
company,  implying  as  it  does  skill  and  care  on  their  part  in  select- 
ing lives,  could  not  be  contended  to  authorize  the  taking  over  in 
mass  by  the  executive  of  one  insurance  company  of  all  the  insured 
lives  and  all  the  annuity  contracts  of  another  company  selected 
and  entered  into,  not  by  the  executive  of  the  first  company,  but  of 
the  other  (k).  In  order,  therefore,  to  maintain  a  contract  of  amal- 
gamation or  any  rights  of  indemnitv  arising  therefrom,  the  power 
to  amalgamate  must  be  shown  ana  strictly  pursued,  and  general 
principles  of  law,  which  would  show  that,  in  the  ordinary  details 
of  business  in  obtaining  necessaries  and  entering  into  contracts  for 


Ch 


(g)  Indemnity  Case,  ReillWAlb.  Arb.)  17. 

(h)  Ernest  v.  Nichda,  0  H.L.  C^401,  414.    Rn  Era  Insurance  Co.,  80  L. 


N.  8.  1834,  0  W.  R.  07  (1801). 

{k)  Indemnity  Case.  Reilly  (Alb.  Arb.)  25 
820 


187.  8L.  T.  N.  8,  814,  OJur 
{i)  Ernest  v.  Nichols.  0  H.  L.  C 


J. 


''-fi^ 


NOVATION   AND  AMALGAMATION. 


406 


them,  the  directors  would  have  power  to  bind  their  share- 
holders, whether  *their  shareholders  had  or  had  not  stipu-  [*  405] 
lated  for  particular  limits  of  liability  in  the  deed,  cannot 
be  appealed  to  in  order  to  support  an  amalgamation  or  an  under- 
taking to  indemnify  as  part  ot  a  contract  of  amalgamation  (0- 

Amalgamation  ultra  vires  can  be  ratified. — But  an  amalgamation 
which  is  at  its  outset  uUra  vires  may  be  ratified  and  accepted  by 
the  shareholders  with  or  without  qualification ;  and  Lord  Cairns,  ai 
arbitrator,  held  that  the  Albert  Society,  in  sanctioning  an  amalga- 
mation effected  by  its  direction  did  not  accept  certain  ultra  vires 
terms  in  the  amalgamation  deed  which  purported  to  impose  on 
them  an  unliuated  liability  in  respect  of  the  debts  of  the  amalga- 
mated companies  (m). 

When  power  to  amalgamate  not  given  by  deed,  it  mny  be  by  special 
resolution. — When  the  original  deeds  constituting  the  company  do 
not  give  the  power  to  amalgamate,  such  power  may  be  given  l)y 
general  resolution,  but  not  so  as  to  alter  the  fundamental  principle 
of  the  original  deed  as  to  the  individual  liability  of  shareholders 
(n).  Therefore  an  amalgamation  purporting  to  do  more  will  be 
void  (o),  though  an  amalgamation  not  altering  the  nature  of  such 
liability  will  be  good  (  p). 

So  no  amalgamation  could  be  intra  vires  which,  in  the  face  of  a 
clause  in  the  original  constitution  of  the  company,  requiring  that 
in  every  contract  there  shall  be  inserted  a  limitation  of  liability, 
purports  to  brin^  upon  the  company  a  liability  not  so  limited  (q). 
But  Lord  RomiUy  held  that  where  amalgamttion  was 
♦authorized,  the  covenant  to  indemnify  made  thtreon  was  [*  406] 
unlimited  (r). 

Policy-holder  accepting  amalgamation  can  only  claim  on  amalgama- 
ting company. — When  a  policy-holder  or  annuitant  of  one  insurance 
company  accepts  an  amalgamation  of  his  compuny  with  another 
companv,  he  can  only  claim  on  such  other  company  as  if  he  had 
originally  obtained  policies  or  annuities  from  that  company  (s). 

Claim  by  amalgamated  on  amalgamating  company  when  policy-holders 
will  not  look  to  amalgamating  company, — And  when  the  policy-holders 
and  annuitants  will  not  look  to  the  amalgamating  company,  the 
amalgamated  companies  can  under  the  deed  of  amalgamation  and 
ifndemnity  only  claim  on  the  assets  of  the  other  with  general  credi- 
tors, or,  in  other  words,  the  indemnity  will  be  limited. 


:     Ki 


({)  Indemnity  Case,  Reilly  (Alb.  Arb.)  25. 
(m)  Ibid,  28. 
In)  Ibid.,  29. 

(o)  Albert  Co.  t.  Bank  of  London  Co.,  same  case. 
Ip)  Albert  Co,  v.  Medical,  p  28,  sumo  case. 
\q)  Indemnity  Case  (No.  2),  Heilly  (Bur.  Arb  )  8. 
British  Provincial  Co.,  8  Giff.  621,  0  L.  T.  N.  S.  08, 

Barte  Smith,  Ilo  Anglo  Life  Co,  8  W.  11. 170.    Ex  irnrto  Angt 
;e  firitish  Provincial  Co.,  10  L.  T.  N.  8  820.  12  W.  R.  701. 
(r)  Ro  BHtish  I'rovident  Co.,  18  S.  J.  242  (Eur.  Arb.). 
(ff)  Indemnity  Case,  Reilly  (Alb.  Arb.)  U,  16  8.  8. 141. 

21  PORTER  ON  INSURANCE.  821 


Anglo- Attstrt^ian  Co.  v. 

517,  10  W.  R.  588.     Ex 

Innlo-AwtrcUian  Co., 


407 


THE   LAWS  OF  INSURANCE/ 


Costs  of  liquidation  of  amalgamated  company  through  default  of  amal- 
gamating company. — The  costs  of  liquidating  the  amiilgamattil  cniu- 
|):init'8  in  consequence  of  the  default  of  the  amalgamating  companits 
will  be  treated  like  the  costs  of  a  surety  who  resists  the  creditoi's 
claim  when  the  principal  debtor  fails  to  pay  it,  and  they  musit  fsliow 
very  strong  reasons  for  resisting  before  they  can  be  entitled  to  such 
costs  (t).  If  the  indemnity  includes  costs  when  ascertained  and 
proved  to  result  from  breach  of  the  covenant  to  indemnily,  they 
may  be  charged  on  the  company  promising  the  indemnity  (u). 

When  policy-holder  hound  by  transfer  of  liability  of  office. — Policy- 
holders can  only  be  made  to  consent  to  a  transfer  of  the  liability  on 
their  policies — (1)  when  power  to  effect  such  transfer  is  expressly 
given  by  the  constitution  of  the  company  granting  the  policies,  and 
(2)  if  the  provision  regulating  the  mode  of  such  transfer  have  been 
strictly  complied  with.  But  to  avoid  risk  of  acquiescence  or  nova- 
tion, it  is  advisable  to  signify  dissent  or  protest  (a;);  and 
[*  407]  wliere  either  is  effectual,  by  formal  ^protest  (y)  to  pay  pre- 
miums and  do  other  acts  needful  to  keep  alive  the  claim 
with  reference  to  such  protest.  Unless  such  protest  be  absolute,  or 
declared  to  be  in  force  until  certain  acts  are  done,  or  information  is 
given  by  the  person  to  whom  it  is  addressed,  difficulties  may  still 
arise,  and  subsequent  acquiescence  be  alleged  with  some  show  of 
reason  (z). 

Novation.  Lord  Caima*  view. — Where  persons  having  claims  by 
way  of  policy  or  annuity,  deed,  endowments,  or  otherwise,  allow 
themselves  to  drift  into  dealings  and  enter  into  relations  with  the 
new  company,  and  to  pay  premiums,  &c.,  and  make  no  protest 
with  regard  to  the  footing  upon  which  they  are  paying  these  pre- 
miums, &c.,  they,  lose  the  security  of  the  old  company  and  become 
creditors  of  the  new  (a). 

Amalgamation  without  policy-holders  losing  rights  against  transferor 
company. — Where  a  company  transfers  its  business  to  another  in 
consideration  of  a  covenant  by  the  transferee  company  to  in- 
demnify the  transferor  against  all  claims  on  policies,  annuities,  and 
other  contracts,  holders  of  annuity  contracts  with  the  transferor 
company,  who  were  also  shareholders,  hy  exchanging  those  shares 
for  an  equivalent  number  in  the  transferee  company,  do  not  pre- 
chule  themselves  from  looking  to  the  transferor  company  for  the 
payment  of  the  annuity  (/>). 

i3y  assenting  to  the  exchange  they  do  no  more  than  agree  that 


(0  Ilml,  84. 

(a)  hidcmnity  Case,  (No.  2),  R(i'\\\y  {Em.  Arh.)  8. 

(x)   Wood'H  Vase,  Rcilly  (All).  Arb.)  54,  15  S.  J   Ctt.l 

(//)  Wtmi's  Vane,  Roilly  (Alb.  Arb.)  54,  15  S.  J.  093,  for  a  very  clear  and  well- 
drawn  nrotcHt. 

(z)  thtrninn's  Vase,  Roilly  (Alb.  Arb  )  144.  Griffith's  Vase,  0  Ch.  App.  874, 
40  L.  J.  Ch.  404,  24  L.  T.  ,N.  S.  458,  1'.)  W.  R.  496. 

(a)  Dorniiiff's  Vase,  Roilly  (Alb.  Arb.)  at  148. 

{!»)  Frere'a'Vase,  Roilly  (Alb.  Arb.)  211. 

322 


Vl\ 


KOVATIOX  AND   AMALGAMATION. 


*409 


the  paid  and  unpaid  portion  of  the  transferee  companj-'s  capital, 
including  their  own  portion  thereof,  shall  be  available  to  indemnify 
the  old  company  in  respect  of  the  old  debts.  They  do  not  merge 
or  extinguish  their  own  claims  against  the  old  company  (c). 

^  Where  company  dissolved,  <£c.,  liability  of  partners  continues,  [*  408] 
unless  specially  discharged. — If  a  person  takes  shares  in  an  in- 
BurancH  company,  and  then  that  company  is  dissolved,  or  its  business 
transferred  to  or  amalgamated  with  that  of  another  such  companv, 
unless  the  dissolution,  transfer,  or  amalgamation  involves  a  dis- 
charge to  the  creditors  of  the  dissolving,  &c.,  company  which 
binds  them,  the  liability  of  the  partners  continues.  Unless  they 
accede  to  the  transfer,  however  conformable  it  may  be  to  the  con- 
stitution of  the  companies  engaged  in  it,  they  are  not  bound.  But 
if  they  accept  the  indemnity  of  the  new  company,  the  old  liability 
ceases  (d). 

Rights  of  creditors,  d'c,  of  transferor  company  preserved. — When  one 
company  transfers  to  another  its  business,  the  transferee  company 
promises  by  the  deed  of  transfer  indemnity  to  the  transferor 
against  all  claims  of  policy-holders  or  creditors  with  vested  or  con- 
tingent rights  against  the  transferor.  This  of  itself  does  not  in  any 
way  debar  such  creditors  from  suing  the  transferors.  If  the  trans- 
ferees continuH  solvent,  the  transferor  can  have  recourse  to  them,  by 
claim  over.  Most  of  the  cases  on  this  point  have  arisen  wliere 
creditors  of  the  transferors  have  found  the  transferees  insolvent. 

Covenants  to  indemnify  not  unlimited. — Covenants  to  indemnify^ 
made  by  insurance  comi)anies  with  each  other  on  amalgamation 
and  transfer  of  business,  are  not  unlimited  in  their  scope.  They 
do  no  more  than  affect  and  bind  the  paid  and  unpaid  capital  of 
the  indemnifying  company.  And  the  assent  of  a  shareholder  to  an 
indemnity  covenant  amounts  to  nothing  more  (c). 

Position  of  Shareholder. — An  insurance  company  agreed  to  amal- 
gamate with  a  second  company,  and  a  deed  in  two  parts  embody- 
ing the  terms  of  amalgamation  was  drawn  up  and  executed,  but 
subsequently  declared  void  for  a  variation  between  the 
terms  of  the  two  parts  (/).  A  shareholder  in  the  ^first  [*  409] 
company  applied  i<>r  shares  in  the  second,  and  received  a 
letter  of  allotment,  but  no  certificate  of  shares.  As  he  did  not  ac- 
cept the  allotment,  it  was  held  that  he  could  not  be  called  upon  to 
contribute  in  the  winding  up  of  the  second  company,  but  must  be 
treated  as  an  applicant  for  i^hares  which  never  had  been  alloted, 
the  insertion  of  his  name  on  the  register  being  neither  authorized 

(r)  Fleming's  Case,  6  Cb.  App.  39«,  3!)  L.  J.  Ch.  250,  23  L.  T.  N.  S.  7T0,  19 
W.  11.  (UllJ. 

{(l)  Lano/s  Case,  Roilly  (Eur.  Arb  )  18  per  Lord  Westbiiry.  ' 

(f )  Indemnity  Case,  Roilly  (Alb.  Arb.)  17.  Frere's  Case,  1(1  S.  J  no?,  Reilly 
(Alb  Arb.)  211.  Fleming's  Claim,  (i  Ch.  App.  8'.>3,  10  W.  R.  603,  23  L.  T.  N. 
S.  770,  3!)  L.  J.  Ch.  250. 

(/)  Wj/nne'a  Case,  28  L.  T.  N.  S.  805,  21  W.  R.  8%.  t 

323 


I 

, 

liik 

II 

*410 


THE   LAWS  OP  INSURANCE. 


nor  ratified  by  him  (^r).  Void  amalgamatwn. — The  amalgamation 
being  void,  there  was  no  consideration  for  taking  shares  in  the  sec- 
ond company,  since  that  company  could  not  give  him  shares  on 
which  he  was  to  be  credited  with  the  value  of  his  old  shares,  and 
as  a  fact  no  agreement  to  take  the  second  company's  shares  was 
proved  (h). 

No  amalgamation  of  life  offices  without  coment  of  High  Court. — Life 
insurance  companies  cannot  now  amalgamate  or  transfer  their 
business  without  the  assent  of  the  High  Court  of  Justice,  to  be  ob- 
tained by  petition  in  the  Chancery  Division  (i). 

It  may  be  stipulated  that  policyholder  shall  accept  liability  of  transfer 
company. — It  is  quite  lawful  (it)  to  make  it  a  term  of  the  original 
contract  of  insurance  that  the  holder  thereof  shall  be  obliged  to 
accept  any  subsequently  substituted  liability  created  by  any  intra 
vires  transfer  or  amalgamation.  This  may  be  done  by  express  and 
apt  words  in  the  policy,  or  by  declaring  the  policy  to  incorporate 
and  be  subject  to  the  constitution  and  bye-laws  of  the  company 
(/),  but  will  in  no  case  be  implied  by  law  (m). 

If  (he  amalgating  companies  are  treated  as  separate^  novation  does  not 

occur. — Where  the  terms  of  the  amalgamation  do  or  purport  to  keep 

the  two  companies  separate,  no  question  of  novation  can 

[*  410]  arise,  and  holders  of  contracts  with  the  *ab8orbed  company 

continue  to  be  creditors  of  that  company  alone  (n). 

The  object  of  proving  novation  is  to  enable  the  old  debtor  to  re- 
sist any  recourse  to  him  for  payment  of  the  debt.  Amalgamation 
uUra  vires. — An  insurance  company  which  has  transferred  its  busi- 
ness ultra  vires,  or  to  a  company  which  had  not  the  power  to  take 
it  over,  or  which,  the  transfer  being  intra  vires  on  both  sides,  cannot 
by  its  constitution  or  the  terms  of  its  policies,  or  both,  compel  the 
contract-holders  to  look  to  the  new  company,  is  not  entitled  to  dis- 
solve, and  may  be  resusticated  for  purposes  of  winding  up  when 
its  contract  debts  fall  due,  unless  it  can  prove  that  the  contract- 
holders  had  full  knowledge  or  sufficient  notice  of  the  arrangement 
(o)  between  the  transferor  and  the  transferee  companies,  and  as- 
sented thereto  in  such  a  manner  as  to  agree  to  look  to  the  trans- 
feree company  onlv  for  satisfaction  (p)  of  the  policy  or  other  in- 
surance contract  when  its  amount  became  payable. 

(0)  Beck's  Ccue,  0  Ch.  App.  802,  48  L.  J.  Ch.  631,  29  L.  T.  N.  S.  307,  22  W. 
R.  848,  460. 

(h)  Same  case. 

h)  88  &  34  Vict.  c.  61,  88.  14,  16. 

(k)  Pollock  on  Contracts  190.  DowBe'a  Ca»e,  8  Ch.  D.  884,  46  L.  J.  Ch.  402, 
86  L.  T.  N.  S.  653,  and  Cocker's  Case,  8  Ch.  D.  1,  45  L.  J.  Ch.  833,  85  L.  T.  N. 
8.  290.    Hort's  Case,  1  Ch.  D.  807,  46  L.  J.  Ch.  821,  88  L.  T.  N.  8.  766. 

(1)  Brice  Ultra  Vires,  p.  Tii,  ccxxxix.,  discussed  in  Pollock  on  Contracts,  p. 
100. 

Lancey'a  Case,  Reilly  (Ear  Arb.)  18. 

Re  Anchor  Ins.  Co,,  Ex  parte  BadtnochJS  Ch.  App.  682,  18  W.  R.  1188. 

ConquetCs  Case,  1  Ch.  D.  334,  45  L.  J.  Ch.  886,  88  L.  T.  N.  8.  702. 

Ex  parte  Gibson,  Re  Smith,  Knight  A  Co.,  4  Ch.  App.  662,  per  Oiffard, 


(m) 


SM 


NOVATION  AND  AMALGAMATION. 


*411 


Shareholders  of  transferor  company  seek  release  from,  tlieir  policy-hold- 
ers.— It  is  consequently  of  equal  importance  lor  the  share-liolders 
of  a  transferring  company  to  induce  the  policy-holders  to  release 
them  and  accept  the  transferee,  where  the  policy-holders  have  the 
option  of  refusal,  and  for  the  latter  in  such  a  case  to  avoid  novation 
and  seek  to  preserve  recourse  against  the  original  grantors  of  the 
policies.  Whether  novation  has  or  has  not  been  made,  being,  as 
already  said,  a  question  not  of  law  or  presumption,  but  of  fact|  in 
the  very  complicated  circumstances  attending  the  amalgamation 
already  alluded  to,  it  is  not  surprising  that  the  views  of  the  Court 
of  Chancery  and  Lords  Cairns,  Westbury,  and  Romilly,  sitting  as 
arbitrators  in  the  winding  up  of  the  Albert  and  European 
Companies,  are  not  wholly  consistent  (q).  ^Decisions  ofar-  [*  411] 
hit.aiors  not  absolvidy  binding. — The  views  of  the  learned  ar- 
bitrators, however,  though  entitled  to  the  greatest  regard  as  opin- 
ions of  very  learned  men,  are  not  binding  on  the  Courts. 

Payment  of  premiums  not  evidence  of  novation. — Payment  of  pre- 
miums necessary  lor  the  maintenance  of  the  policy  or  other  similar 
security  to  the  transferee  company  is  not  sufficient  to  constitute 
novation  (r).  The  act,  being  ambiguous,  is  not  sufl&cient  to  raise  a 
presumption  against  the  policy-holders,  who  in  cases  of  transfer 
cm  only  pay  at  the  transferee's  office,  and  payment  may  be  made 
them  either  as  agents  for  the  grantors  of  the  contract  or  as  princi- 
pils. 

Payment  under  protest  toill  prevent  novation. — Formal  protest  in 
writing,  declaring  that  future  premiums  would  be  paid  only  sub- 

I'ect  to  and  on  the  foot  of  that  protest,  and  prevent  any  question  of 
apse,  is  sufficient  to  negative  novation  (s). 

A  receipt  from  a  company  other  than  the  original  insurers  may 
be  explained  by  payment  either  as  accepting  the  new  company  us 
futurers,  or  as  agents  of  the  original  company  (<),  and,  being  am- 
biguous, will  not  prove  novation. 

Payment  in  ignorance  of  change. — If  the  holder  of  the  receipts  knew 
nothing  of  amalgamation,  he  cannot  be  held  to  have  assented  to 
it  (w). 

Without  authority. — And  if  the  premium  be  paid  to  the  transferee 
company  by  the  bankers  of  the  contract-holder's  widow,  without 
the  executor's  authority,  there  is  no  novation  (a;).  So  i  f  the  contract- 
holder  cannot  read,  and  does  not  otherwise  learn  of  the  amalgama- 
tion, he  will  not  be  held  to  have  accepted  the  liability  of  the  amal- 
gamating company  (y). 

Lindley  on  Purtnership  463. 

35  &  80  Viet,  c  41,  s.  7.    And  see  BarthtVa  Case,  5  Ch.  App.  640 ;  Hold- 
Case,  14  Eq.  72,  26  L.  T.  N.  8.  415,  20  W.  R.  567. 

Wood's  Case,  Reilly  (Alb.  Arb.)  54,  per  Lord  Cairns.     Doming'' s  Case, 
(Alb.  Arb.)  144.    How'' a  Executors'  Case,  Reilly  (Alb.  Arb.)  245. 
Whitehaven  Bank  Case,  Reilly  (Alb.  Arb.)  62 
Power's  Case,  Reilly  (Alb.  Arb.)  232. 
Dupre's  Executors''  Case,  Reilly  (Alb.  Arb.)  236. 
Clegg'a  Case,  Reilly  (Alb.  Arb.)  206. 

825 


•    '^    |.!, 


L.iaiiij 


*413 


THE   LAWS  OF  INSURANCE. 


[*  412]  Acceptance  of  bonus  ^evidence  of  novation. — But  accept^nce 
of  a  bonus  from  t^e  transferee  company  is  evidence  of  an 
intention  to  accept  its  liability  in  lieu  of  the  liability  of  the 
transferor  company  (o).  So  will  the  carrying  in  of  achiim  against 
the  transferee  company,  whether  before  (6)  or  in  the  winding  up,  be 
evidence  of  novation  (c). 

Indorsement  of  policy  by  transferee  company. — Novation  also  takes 
place  when  the  transferee  company  indorses  the  original  policy 
wiih  an  acceptance  of  liability  conditionally  upon  payment  of  pre- 
miums to  it  (d)  «nd  generally  when  a  policy-holder  lias  sent  in  his 
policy  to  be  i  a\  by  the  transferees,  or  to  be  exchanged  for  one 

of  theirs  ve;>         -*    .^ts  any  voucher  declaring  their  liability  (/), 
novation  is  cieur. 

Verbal  protest  not  mjjlcient  to  prevent. — Verbal  protests  by  a  policy- 
holder to  an  agen^  of  ht"  '  >mpany  will  not  suffice  to  prevent  nova- 
tion in  face  of  othti  fact*  evidtncing  it  (g).  But  complete  protec- 
tion if  desired  may  be  obtained  by  formal  written  protest  and  pay- 
ment of  premium  subject  thereto.  A  good  instance  of  such  protest 
is  Wood^s  Case  (h). 

Wiere  policyholder  is  shareholder  or  party  to  deed  of  transfer, — Where 
a  policy-holder  is  also  a  member  or  shareiiolder  in  the  company 
whose  business  is  transferred,  and  a  party  to  the  deed  of  transfer, 
novation  will  be  held  to  have  taken  place  as  to  his  policy  (i). 

Novation  by  mortgagor  binds  mortgagee. — Where  a  policy  is  mort- 
gaged, novation  by  the  mortgagor  will  bind  the  mortgagee 
[*  413]  (k).    So  also  in  the  ^c.ise  of  a  settled  policy,  if  the  settlor 
accepts  the  liabilities  of  the  transferees,  the  trustees  cannot 
claim  against  the  transferors  (I). 

Receipt  of  annuity  n^t  sufficient. — The  holder  of  an  annuity  con- 
tract which  has  not  matured  is  in  just  the  same  position  as  a 
policy-holder.  But  when  the  annuity  has  become  due,  receipt  of 
the  instalments  thereof  without  demur  from  a  company  other  than 

(a)  Ex  parte  Nunndey,  Re  Times  Life  and  Guarantee  Co  ,  3D  L.  J.  Ch.  275, 
5  Ch.  Ann  381,  18  W.  U.  ooO.  Spencer's  Case,  6  CU.  Ann.  362, 40  L.  J.  Ch.  456, 
?4  L.  T.  N.  S.  455,  10  W.  R.  4!tl. 

{b)  Even's  Claim,  10  Eq.  354.  Knox's  Case,  Reilly  (Alb.  Arb.)  132,  Allen's 
Case,  Reilly  (Alb.  Arb  )  127. 

(e)  Re  National  Provident  Life  Co.,  9  Eq.  306.  Re,  International  and  Her- 
cules Co ,  Ex  puito  niuod.  5)  Eq.  3 16,  39  L.  J.  Ch.  295,  22  L.  T.  N.  S.  467.  18 
W.  R.  370.  ' 

{d)  Re  European  Co.,  Miller's  Case,  8  Ch.  App.  891. 

(c)  GritlUh's  Case,  0  Ch.  App.  374,  40  L.  J.  Ch.  464,  24,  L.  T.  N.  S.  458.  19 
W.  R.  495. 

( f)  Ilaiiirey's  Case,  Reilly  (Alb.  Arb)  138, 16  S.  J.  713. 

(g)  Rimz's  Case,  Reilly  (Alb.  Arb.)  104.  Howell's  Case,  Reilly  (Alb.  Arb  ) 
117,  16  S.  J.  631.     German  Life  Co.  Case,  Reilly  (Alb  Arb.)  189. 

(A)  Reilly  (Alb.  Arb.)  54. 

(i)  Ex  parte  Stephens  9  Eq  694, 23  L.  T  N.  S.  264,  18  W.  R.  725.  Fleming's 
Case,  6  Ch.  App.  393.  89  L.J.  Ch  250,  23  L.  T.  N.  S.  770,  19  W.  R.  668.  tiar- 
man's  Case,  1  Ch.  D.  826,  45  L.  J.  Ch   336,  33  L.  T.  N.  S.  700. 

(k)  Werninck's  Case.  Reilly  (Alb  Arb.)  101. 

(l)  Andrew's  Cast,  Iteilly  (Alb.  Arb.)  107. 

326 


NOVATION  AXD  AMALGAMATION. 


*41.3 


the  grantors  will  not  amount  to  novation  (m^,  since  accepting 
from  B.  payment  of  a  debt  due  by  A.  is  no  evidence  that  the  re- 
cipient considers  B.  his  debtor  (n).  In  certain  cases,  however,  the 
annuitant  cannot  resist  novation.  Otherwise  where  deed  of  settlement 
provides  that  only  funds  of  company  /iai/e.^Thus,  where  tlie  deed  of 
settlement  of  the  grantor  company  provides  that  its  funds  and 
property  only  shall  be  liable  for  claims  on  the  company,  and  they 
are  transferred,  his  claim  follows  them  into  new  hands  (o). 

Indorsement. — And  if  the  annuitant  accepts  an  indorsement  on 
his  contract  by  the  transferee  company,  this  would  seem  to  amount 
to  novation  (p): 

Effect  of  successive  amalgamations. — The  effect  of  successive  amal- 
gamations, if  agreed  to  by  the  creditor,  would  be  to  transfer  his 
claims  on  the  assets  of  the  original  company  to  the  assets  of  the 
last  amalgamating  company,  including  all  that  it  had  received 
from  the  different  companies  amalgamated.  Thus  if  an  annuity 
contract  was  entered  into  with  the  St.  George  Company,  wiiich 
amalgamated  with  the  Metropolitan  Counties  in  18G1,  which  in 
1862  amalgamated  with  the  Vvestern,  which  in  1865  amalgamated 
with  the  Albert,  the  claim  of  the  annuitant  would  be  transferred 
from  the  St.  George  Company  to  the  assets  of  the  Albert  Company 
as  well  original,  as  those  derived  from  amalgamation  (q). 

(to)  Re  National  Provident  Life,  9  Eq.  306.  Pott's  Case,  5  Ch.  Ann.  118,  18 
W.  K.  'Jm. 

(n)  Re  India  and  London  Life  Co.,  7  Ch.  App  651. 

Co)  Dowse's  Case  (European),  3  Ch.  D.  884,  46  L.  J.  Ch.  402,  35  L.  T. 
N.  S.  G53. 

ip)  DaWs  Case,  Reilly  (Alb.  Arb.)  11.    See  Pott's  Case,  supra. 

(q)  Dale's  Case,  supra. 


I 


'h 


327 


415 


THE  LAWS  OF  INSURANCE. 


[*  414] 


♦CHAPTER  XXIII. 


FOREIGN   COMPANY. 


Domicile  of  company. — The  domicile  of  an  insurancp  company 
may  be  of  great  importance  to  those  who  deal  with  it;  for  it  is  very 
common  for  companies  constituted  within  and  under  the  lawM  of 
one  jurisdiction  to  carry  on  business  in  another.  Thus  Scotch 
companies  do  a  large  business  in  England,  and  English  companies 
appear  in  suits  before  the  Courts  of  the  United  States  and  of  every 
colony  in  the  empire,  and  the  colonial  companies  very  often  trade 
in  other  colonies.  And  usually,  as  a  check  on  their  agents,  such 
companies  refuse  to  allow  any  agents  other  than  directors  to  grant 
policies  (a).  And  also  they  have  much  if  not  most  of  their  assets 
in  some  other  jurisdiction. 

Foreign  insurance  companies  can  trade  here  freely. — An  insurance 
company  is  domiciled  where  its  chief  registered  office  is  (6). 

No  special  terms  are  in  this  country  laid  upon  foreign  insurance 
companies  which  are  not  also  laid  on  English  companies  (c).  Ex- 
isting foreign  companies  need  not  register  under  the  Companies 
Acts,  whether  estaolished  before  or  alter  1862,  nor  must  they  be 
incorporated  according  to  the  laws  of  their  own  country  ((£). 

Rights  of  foreign  companies. — Companies  formed  out 
[  *415]  side  the  United  Kingdom  may  *trade  irrespectively  of 
any  convention.  They  cannot  register  under  the  Com- 
ppnifs  Acts,  1862,  without  dissolution  and  re-formation.  So  their 
coming  to  trade  in  England  will  not  alter  the  liability  of  the  mem- 
bers of  the  company  in  any  way  (e). 

By  virtue  of  special  conventions,  French,  German,  Belgian,  or 
Italian  insurance  companies,  legally  constituted  under  the  laws  of 
their  respective  countries,  may  freely  exercise  all  their  rights  under 
such  constitution  in  this  country,  including  the  right  of  appearing 
before  the  Courts  as  plaintiffs  or  defendants  (/),so  far  as  such  con- 
stitution complies  with  the  laws  and  customs  of  this  country,  i.  e., 


(a)  Kelly  v.  London  and  Staffordshire,  1  Cab.  &  Ellis  47.      In  some  colonies 
the  Legislature  has  intervened,  and  forced  foreign  companies  to  name  an  agent 
and  lodge  funds  within  the  jurisdiction  :     South  Australia  Act,  No.  277  of  1878. 
(6)  Joneay.  Scottish  Accident  Co.,  17  Q.  B.  D.  421 
(c)  Life  Assurance  Companies  Act,  1870  (83  &  34  Vict.  n.  61). 
(rf)  Bateman  v.  Service,  6  App.  Gas.  886,  60  L.  J.  P.  C.  41,  44  L.  T.  N.  S 
86. 
(e)  Bulkeley  v.  Schutz,  L.  R.  8  P.  C.  764,  709,  6  Moore,  P.  C.  N.  S.  i\i\. 
^)  See  Conventions  in  Buckley  626. 

828 


NOVATION   AND  AMALGAMATION. 


416 


that  they  are  found  to  comply  with  the  conditions  prescribed  by 
the  laws  of  this  country  (gr). 

It  does  not  matter  whether  the  companies  were  formed  before  or 
after  the  making  of  the  conventions  (gr).  But  almost  the  only 
thange  effected  by  these  conventions,  as  will  be  seen  from  the  cases 
already  cited,  has  been  to  admit  English  companies  in  the  coun- 
tries named,  the  foreign  companies  having  already  been  admitted 
here. 

American  experience  of  foreign  companies. — American  reports  teem 
with  cases  of  insurance  trading  outside  the  State  in  whicii  tlie  com- 
,  panics  arc  associated  for  trading  purposes.  But  such  cases,  while 
in  many  respects  they  will  illustrate  the  rules  of  English  law  on 
the  subject,  go  to  a  great  extent  on  special  statutes  empowering 
policy-holders  1o  sue  in  the  State  of  their  domicile  irrespective  of 
the  domicile  of  the  insurers  (A). 

Foreign  contract  law  applicable. — The  law  which  applies  to  a  con- 
tract with  a  foreign  country  is  well  stated  as  follows :—"  When  a 
suit  is  brought  on  a  policy  in  a  State  other  than  that  where  the 
contract  is  made  or  to  be  performed,  the  lex  fori  governs 
*the  remedies  for  enforcing  the  contract,  but  not  its  con-  [*  416] 
struction  or  the  legal  rights  arising  under  it.  These  depend 
usually  on  the  laws  of  the  place  where  the  contract  is  to  be  per- 
formed, although,  where  there  is  anything  in  the  circumstances  to 
show  that  parties  had  specially  in  view  the  law  of  the  place  where 
the  contract  is  made,  this  law  will  govern  though  the  contract  is  to 
be  performed  elsewhere  "  (i). 

Provision  excluding  foreign  law. — Where  the  contract  is  foreign,  by 
the  test  given  above  it  will  be,  unless  otherwise  prqvided,  governed 
by  tho  law  of  the  foreign  country  in  which  it  is  made.  But  this 
will  not  wholly  oust  the  jurisdiction  of  the  Courts  of  the  assured's 
domicile  (^),  and,  if  the  msurers  have  an  office  within  that  domi- 
cile for  the  receipt  of  premiums,  service  on  their  agent  will,  it 
seem,  be  permissible  (I). 

Where  an  assignment  was  made  abroad  of  an  English  life  policy, 
and  th^  assignor  and  assignee  were  domiciled  abroad,  tho  validity 
of  the  assignment  was  determined  by  the  law  of  the  place  where 
the  assignment  was  made  (m). 

Policy  of  foreign  company  doing  business  here. — When  a  policy  is 
granted  by  a  foreign  company  carrying  on  business  within  the 
realm,  the  contract  will  be  held  to  be  made  at  the  head  office  abroad 


Ibid.,  625,  627. 
h)  Cromwell  V.  Royal  Canadian  Insurance  Co.,  49  Maryland  366.     Universal 
Life  Co.  V.  Backus,  61  Maryland  28.    Myer  v.  London,  Liverpool,  and  Globe, 
40  Maryland  596. 
(t)  Ruse  V.  Mutuul  Ben^t  Co.,  23  N  Y.  616. 
Uc)  Parken  v.  Royal  Exchange,  8  C.  S.  C.  (2nd  series)  865. 
(/)  M^Cullough  V.  Yorkshire  Insurance  Co.,  1  Crawford  &  Dix  (Ir.  Circ.  Rep.) 
264  (1838). 

(m)  Lee  v.  Abdv,  17  Q.  B.  D.  809,  84  W.  R.  653;  see  also  Mutual  Life  Co.  v. 
AUen,  52  Am.  Rep.  247,  138  Mass.  24. 

329 


rfjil 


■i'  w\ 


::iaiiii 


*418 


THE  LAWS  OF  INSURANCE. 


of  buch  company  if  the  consent  to  issue  it  must  be  and  is  there 
given  (h),  and  it  mav  be  sued  on  there.  Consequently,  where  a 
person  with  English  domicile  takes  out  a  policy  from  such  a  com- 
pany, it  would  seem  that  payment  of  the  amount  tliereof 
[*  417]  under  judgment  in  *the  domestic  forum  of  the  company  to 
the  administrator  within  such  forum  of  the  assured,  would 
be  a  bar  to  any  suit  for  the  recovery  of  the  amount  of  the  policy  in 
the  domicile  of  the  insured  (o). 

Foreign  contract  place  of  payment. — Where  the  policy  is  foreign 
and  no  provisions  are  made  therein  as  to  the  place  of  payment, 
&c.,  demand  must  be  made  at  the  head  office  abroad  before  tlie 
company  can  be  considered  in  default  (p),  since  the  loom  contractus 
is  locus  solutionis  unless  expressly  otherwise  provided  (g).  But  in 
case  of  insolvency,  the  creditor  on  a  policy  would  be  entitled  to 
rank  in  his  own  forum  against  any  funds  deposited  within  its  juris- 
diction (r),  and  generally  having  got  judgment  on  his  policy  here 
or  abroad,  in  accordance  'with  the  law  governing  it,  would  be  en- 
titled to  rank  as  a  secured  or  unsecured  creditor  (according  to  the 
terms  of  his  policy)  on  the  assets  of  the  company  here  («). 

Condition  making  it  English. — If  the  assured  wants  a  contract  with 
a  foreign  company  to  be  governed  by  the  law  of  his  own  country, 
he  should  have  a  provision  to  that  effect  inserted  in  the  policy, 
which  will  be  eflFectual  to  oust  the  lex  loci  contractus  (t).  If  he 
thinks  the  foreign  law  more  favourable  to  him,  he  can  contract  ac- 
cordingly. 

In  dealing  with  foreign  companies,  it  is  necessary,  in  order  to 
avoid  such  an  inconvenience,  to  see  that  the  policy  contains  a  pro- 
vision that  payment  on  it  shall  be  made  in  the  domicile  of  the 
assured,  since  in  a  foreign  contract  the  locus  solutionis  is  foreign  too 

unless  otherwise  stipulated  (u). 
[*  418]  ^Provision  for  policies  in  different  jurisdictions. — Perhaps 
the  best  example  of  the  mode  in  which  the  insurance 
companies  can  make  provision  for  policies  in  different  jurisdic- 
tions is  to  be  found  in  the  special  Act  of  the  Scottish  Widows' 
Fund,  a  company  domiciled  m  Scotland,  wherein  it  is  provided 
that  every  policy  effected  with  a  company  having  its  head  office 
in  London  or  Dublin  respectively,  even  though  it  should  appear 

(n)  Equitable  Life  Co.  of  the  U.  S  v.  Perrault,  26  Lr.  Can.  Jur  382.  Parken 
V.  Royal  Exchange  (1840),  8  C.  S.  C.  (2nd  series)  at  372.  Redpath  v.  Sun  Mu- 
tual Co.,  14  Lr.  Can.  Jur.  90.  Von  Savigny,  Conflict  of  Laws,  tr.  by  Guthrie 
(2nded  ),  ir)6,  215.  265,  and  notes. 

(o)  Equitable  Life  Co.  of  the  U.  S.  v.  Perrault,  26  Lr.  Can.  Jur.  382  (1882),  a 
very  full  case. 

(p)  Ibid.  \ 

(q)  Parken  v.  Royal  Exchange,  8  C  S.  C.  (2nd  series)  865-375. 

(r)  Orr  Ewing  v.  Orr  Swing,  21  Sc  L.  R.  423,  11  C.  S.  C.  (4th  series)  600. 
Equitable  Life  Co.,  v.  Perrault,  ubi  supra. 

(s)  Thurburn  v.   Steward,  L.  R.  3  P.  C.  478,  40  L.  J.  P.  C  5,  19  W.  R.  678. 

(t)  Robinson  v.  Bland,  2  Burr.  1077. 

(»«)  Parken  v.  Royal  Exchange,  8  C.  S.  C.  (2nd  series)  365-373,  per  Lord 
Cockburu. 

330       . 


! 


NOVATION  AND  AMALGAMATION. 


♦419 


on  the  face  of  the  policy  that  it  was  not  in  fact  effected  in  England 
or  Ireland  (x).  S.  50  of  the  same  Act  contains  a  further  provision 
to  the  (?ame  end,  that  assignments  and  discharge  of  policies  of  the 
eocitty  executed  outside  the  United  Kingdom  shall  be  valid  and 
effectual  if  made  and  executed  according  to  the  usual  mode  of 
making  and  executing  suci  ducuments  in  the  United  Kingdom, 
or  in  the  place  where  the  same  shall  have  been  made  and 
executed. 

Law  as  to  deposit  inefficaciom. — The  statutory  requirement  that 
every  life  insurance  company  should  deposit  £20,000  with  the 
Accountant-General  applies  equally  to  all  companies,  British  or 
foreign;  but  as  there  is  no  provision  insisting  that  companies  not 
domiciled  within  the  jurisdiction  should  keep  the  fund  deposited  after 
they  have  satisfied  the  test  by  the  Act  provided,  the  assured  has 
no  guarantee  that  a  fu..d  will  remain  in  this  country  to  satisfy  his 
claims  (y).  In  the  case  of  large  foreign  companies  it  seems  to  be 
the  practice  to  lodge  assets  with  trustees  within  this  country  to 
answer  claims  there  arising.  This  procedure  provides  funds  upon 
which  judgment  may  be  executed  within  the  domicile  of  the  as- 
sured, or  on  which  he  may  rank  ns  a  creditor,  but  does  not  obviate 
the  necessity  of  the  provisions  already  mentioned  as  to  the  law 
which  is  to  govern  the  construction  of  the  contract  (z).  It 
mny,  however,  be  observed  that  iasurance  *law  varies  [*  419] 
little  throughout  those  countries  where  insurance  is 
practiced. 

Scotch  Law. — In  Scotland  jurisdiction  on  a  foreign  policy  can  be 
with  certainty  created  if  doubt  arises  by  arrestment  of  funds  of 
the  foreign  insurer  within  the  jurisdiction  (2).  An  English  com- 
pany dealing  in  Scotland  by  an  agent  not  allowed  to  do  more  th  an 
give  interim  receipts  must,  it  seems,  be  sued  in  England  (a).  So 
also  when  the  company  was  English,  and  a  conditional  policy  was 
granted  in  Australia  (6) ;  and  in  a  recent  case  suit  was  brought  in 
England  on  a  policy  granted  by  an  English  company  on  property 
in  Minnesota  (c). 

Test  when  contract  by  agent  is  fordgn. — If  the  insurer's  iigents  in 
the  country  of  the  sssured  have  power  to  effect  a  complete  contract 
there  without  reference  for  consent  to  the  foreign  head  office,  the 
contract  will  not  be  foreign  (d),and  will  be  valid  where  made,  even 
though  forbidden  by  a  monopoly  within  the  domestic  forum  (e)  of 
the  insurers. 

(x)  The  Scottish  Widows'  Fund  Act,  188*2  (45  and  46  Vict.  c.  Ixxv.),  s.  55. 

(y)  33&34  Vict.  c.  01,  8.  8. 

(2)  P.  417,  supra;  and  see  Ex  parte  Dever,  18  Q.  B  D.  CGO. 

(z)  Parken  v.  Royal  Exchange,  8  C.  S.  C  (2nd  series)  365. 

\a)  Mackiev.  European  Co.,  21  L.  T.  N.  S    102,  17  W.  R.  987. 

{b)  liossiter  v.  Trufalgar  Life,  27  IJeav.  377. 

(c)  Kelly  V.  London  and  Stafordaldre  Co  ,  1  Cababe  &  Ellis  47. 

(d)  Albion  Insurance  v.  Mills,  3  Wilson  &  Shaw  (Sc.)  218,  233  1  D.  &  CI. 
(H.  L.)  242  ^  „  ^  „ 

(e)  Same  case,   followed  in   St.   Patrick   Co.  v.  Brebner,  8  C.  S.  C  (1st  se- 

rics)51.  gg^ 


1 


1^ 


'r'    liil^ 


•:::♦'!  1 


420 


THE    LAWS  OF  INSURANCE. 


Proceedings  where  contract  and  company  foreign. — Where  the  com- 
pany and  the  contract  are  both  foreign,  judgment  may  be  obtained 
in  the  locus  contractus^  and  then  proceeded  on  in  the  English  courts 
(/),  and  a  winding  up  order  may  be  obtained  against  a  regis- 
tered company  even  though  the  persons,  property,  management, 
and  directorship  be  abroad,  provided  that  it  is  a  company  which 
at  the  outset  contemplates  some  description  of  business  in  this 
country,  even  although  in  substance  all  its  operations  may  be 

abroad  (jg). 
[*  420]  *It  has  been  laid  down  by  the  Irish  Courts  that  a  com- 
pany which  holds  an  office  in  a  foreign  country  for  the 
receipt  of  premiums,  where  the  entire  contract  is  made  and  where 
the  office  is  still  open  for  future  contracts,  does  by  euch  contract 
enter  into  an  engagement  that  for  all  purposes  of  suit  their  office 
shall  be  deemed  their  dwelling-house  (A).  Formal  completion  of 
the  contract  at  the  head  office  will  not  make  any  difference,  as  the 
holding  open  office  is  an  undertaking  that  the  office  is  to  be 
deemed  their  residence,  not  only  for  receipt  of  premiums,  but  also 
lor  enforcing  the  contract  (i).  But  as  before  mentioned  an  action 
has  been  brought  in  England  on  a  policy  granted  by  an  English 
company  (through  a  broker)  in  Minnesota  (Jc)^  and  in  New  York 
State  on  a  policy  there  granted  on  property  in  Canada  (I). 

Service  of  writ  on  company.— Substituted  service  has  been  allowed 
on  an  agent  in  Dublin  of  an  English  company  who  had  received 
some  of  the  premiums  for  them,  the  company  refusing  to  appear 
in  Ireland  and  requiring  suit  in  England  (m).  But  under  the  new 
Rules  (n)  a  policy  effected  in  England  with  a  Scotch  or  Irish  com- 
pany cannot  be  sued  on  here  unless  the  contract  is  made  at  the 
company's  office  here ;  for  there  is  no  power  to  allow  service  of  a  writ 
out  of  the  jurisdiction  in  actions  for  breach  of  contract  under  Ord. 
xi.  r.  1  (e),  where  the  defendant  is  domiciled  in  Scotland  or 
Ireland  (o). 

(/)  Which  can  now  be  done  under  R  S.  C  1883,  Ord.  iii.  r.  6,  and  Ord.  xiv. 
Grant  V.  Easton,  53  L.  J.  Q  B.  C8,  49  L.  T.  N.  S.  645,  82  W.  R.  239. 

(g)  Bulkdey  v.  Schutz,  L.  R  3  P.  C  764.  Bateman  v.  Service,  6  App.  Cas. 
386,  50  L  J.  P.  C  41.44  L  T.  N  S  436.  Princess  of  Reussv.  Bos,  L.  R.  5  H. 
L.  176,  40,  L.  J.  Ch.  655,  24  L.  T.  N.  S.  641,  reported  also  as  Re  General  Land 
Credit  Co.,  6  Ch.  App.  863,  2i  L.  T.  N.  S.  454,  18  W.  R  50r>. 

(h)  Moloney/  (Exor.)  v.  Tulloch,  1  Jones  (Ir.  Ex.)  114  (1835).  Kelltj  v.  Lon- 
don and  Staffordshire,  1  Cababu  &  Ellis  47. 

(f)  Same  case.    And  see  Welsh  v.  Reynolds,  8  Ir.  Law  Rec  N.  S.  105. 

(k)  Kelly  v.  London  and  Staffordshire  Fire,  1  Cabab^  &  Ellis  47.  Lycoming 
Co  V.  Ward,  901115*5. 

(l)  Equitable  L\fe  Co.  v.  Perrault,  26  Lr.  Can.  Jur.  882. 

(m)  WCullagh  v.  Yorkshire  Insurance  Co.  (1838),  1  Crawford  &  Dix  (Ir. 
Circ.  Rep )  264.  Kelly  v.  London  and  Staffordshire  Fire,  1  Cabab^  & 
Ellis  74. 

(n)  R.  S.  C.  1883,  Ord.  xi.  r.  1  (e). 

(o)  Lenders  v.  Anderson,  12  Q.  B.  D.  50,  53,  L.  J.  Q.  B.  104,  49  L.  T.  N.  S. 
637,  82  W.  R.  230.    Jones  v.  ScoUish  Equitable,  17  Q.  B.  D.  421. 

332 


IP 


NOVATION   AND  AMALGAMATION. 


42 


*When  a  company  with  head  office  in  England  was  sued  [*  421] 
in  Ireland  and  served  in  England  in  accordance  with  the 
Irish  practice,  and  failed  to  appear,  the  validity  of  a  judgment  by 
default  in  Ireland  was  held  not  to  be  afifected  by  proof  in  English 
courts  that  the  service  was  invalid  (p).  The  Court  will  allow  pro- 
ceedings on  the  foreign  judgment  imder  Ord.  xiv.  of  the  Rules  of 
the  Supreme  Court,  1883  (g). 

Judgments  obtained  by  or  against  insurance  companies  in  one 
part  of  the  United  Kingdom  are  enforceable  in  any  other  part  of 
the  kingdom  in  conformity  with  the  provisions  of  the  Judgment 
Extensions  Act,  1880  (r). 

(p)  Sheeley  v.  Professional  Life,  27  L.  J.  C  P.  233  (Ex.  Ch  1857). 
(o)  See  R.  S.  C  1883,  Ord.  iii.  r.  6.    Grani  t.  Easbm,  53  L.  J.  Q.  B.  68,  4d 
L.  T.  N.  S.  645.  83  W.  R.  239. 
(r)  31  &  32  Vict.  c.  64. 


i 


I 


888 


;■,  IM 


*423 


THE   LAWS  OP  INSURANCE. 


[*  422] 


♦CHAPTER  XXIV. 


AGENTS. 

Agents  necessary  to  all  companies. — All  insurance  partnerships  or 
corporations  must,  by  their  very  nature,  act  through  agents  (a). 
But  the  powers  of  those  agents  vary  considerably  (').  The  acts  of 
the  managers  or  directors  or  governing  body  of  an  insurance  cor- 
poration are  binding  on  the  corporation,  unless  they  exceed  the 
powers  of  the  corporation  as  declared  by  the  instrument  constitu- 
ting it,  or  the  particular  powers  by  such  instruments  accorded  to 
the  managing  body. 

But  such  companies  have  also  many  subordinate  agents,  whose 
powers  are  variously  limited,  and  who,  while  they  cannot  any  more 
than  the  managing  body  bind  the  corporation  by  an  infringement 
of  the  articles  of  its  constitution,  are  still  further  disqualified  from 
many  acts  by  the  special  character  of  the  authority  given  to  llieiu 
by  the  managing  body  (6)  (*). 

Powers  of  directors^  &c.,  presumed  to  be  known. — Persons  dealing 
with  insurance  companies  will  be  deemed  to  have  notice  of  the 
powers  of  their  managers,  whatever  the  morle  in  which  the  com- 
pany is  constituted,  so  fur  as  the  constitution  of  the  company  de- 
tines  and  limits  the  same.  But  merely  directory  provisions  therein, 
which  are  only  for  the  guidance  of  the  directors,  do  not  concern, 
and  will  not  affect,  persons  dealing  with  the  company  (c). 

Authority  of  general  agent. — And  it  seems  to  bo  good  law 
[***  423]  that  ''the  powers  of  a  *general  agent  are pramd  facie  co-ex- 
tensive with  the  business  entrusted  to  his  care,  and  will  not 
be  narrowed  by  limitations  not  communicated  to  the  person  with 
whom  he  deals"  (d),  except  on  some  such  ground  as  the  notice 

{a)  Montreal  Asmraurc  v.  M'Oillivarij,  13  Moore  P.  C.  87,  8  W.  11.  l';5. 
Bi'ice  Ultra  Vires  (2ii(l  ed  )  42 

(/>)  Royal  British  Hank  v.  Turqiiand,  0  E.  &  B.  327,  25  L.  J.  Q  B.  817  (Ex. 
Ch  ) 

(f )  Aqar  V.  Athenceum  (18r)8),  8  C.  B.  N.  S.  72:>,  27  L.  J.  C.  P.  05,  0  W.  R. 
277      Aiiirc  of  ]V(ilcs  Co  v.  Some,  ;U  I..  T.  ().  S.  U\). 

ill)  Iiisurailre  Co  v.  Wilkinson,- "iil  Wall  (U.  S  )  '2-J2.  Oak  v.  Lewis,  ^Q.  B. 
730,  10  L.  .r.  Q.  B.  ]\\)  S/iannon  v.  Gore  District  Mutual,  \i  U.  C.  (App  )  a%. 
Hastings  Mutual  Co.  v.  Shannon,  2  Canada  1A)\. 

^  A  local  agent,  with  authoritv  to  receive  pretninms  and  issue  policies,  has  no 
authority,  as  such,  to  waive  condition  ot"  policy  requiring  assent  of  company  to 
circumstances  affecting  the  risk.  Kytc  v.  Commercial  Union  Assurance  Co.,  144 
Mass   i'd. 

^  An  agent,  rncciving  from  assured  application  for  chnn(;e  in  policy,  and  un- 
dertaking to  procure  such  change,  is  to  ho  treated  as  agt.  of  assured  and  uot  of 
company.    Duluth  Bank  v.  Knoxvitle  F.  Jna.  Co.,  85  Tenu.  70. 

334 


S. 


AGENTS. 


*424 


which  persons  dealing  with  a  company  mu<t  be  taken  to  have  of 
such  powers,  where  they  are  conferred  by  statute  or  other  instru- 
ment constituting  the  company. 

General  agent  not  authorized  to  promise  policy. — General  agency 
does  not  give  an  authority  to  insure  or  impose  any  duty  to  do  so 
(e).  It  is  not  within  the  ordinary  duty  of  an  insurance  agent  to 
undertake  to  grant  a  policy,  and  such  an  undertaking  will  not  bind 
the  company  unless  the  agent  was  specially  authorized  (/). 

Representations  of  agent  bind  company.  Answers  by  agent  for  as- 
g^red. — The  representations  of  an  agent  having  authority  to  solicit 
insurances  and  receive  proposals  bind  the  company  (g) ;  and  where 
an  agent  of  the  insurer  writes  the  answers  of  the'assured  for  him, 
the  assured  is  presumed  to  have  read  such  answers  before  signing 
ther.  :%)  (•). 

Jjcl  credere. — Del  credere  agents,  who  are  commissioned  to  insure, 
may  insure  as  owners,  and,  if  sued  for  premiums  in  case  of  a  loss, 
can  set  off  the  amount  of  the  policy  (i).  But  if  they  describe  them- 
selves in  the  policies  as  agents,  though  they  may  be  liable  for  the 
premiums,  they  have  nothing  to  do  with  the  policies  C^-)- 

If  the  general  agent  of  a  company  makes  an  unwise  contract  for 
them,  or  is  satisfied  with  answers  in  proposals  which  ought 
not  to  have  been  deemed  satisfactory,  *in  these  and  many  [*  424] 
more  supposable  cases  (collusion  on  the  part  of  the  person 
seeking  insurance  being  out  of  the  question)  the  company  will  be 
clearly  bound,  because  in  all  the  supposed  cases  the  agent  would 
be  acting  within  theecope  of  the  authority  which  the  company  held 
hiAi  out  as  possessing  (0. 

General  agetit  may  extend  time  for  pnying  premiums. — If  a  general 
agent  gives  grace  for  the  payment  of  overdue  premiums,  the  com- 
pany will,  it  seems,  be  bound,  and,  if  not  bound,  if  the  directors  re- 
receive  the  agents  accounts  With  the  entry  of  acceptance  of  overdue 
premiums  without  objection,  they  will  ratify  his  act  (m). 

General  agent  cannot  extend  time  for  paying  premiums  where  amdi- 

(c)  Frenrh  v.  Backhouse,  5  Burr.  27'J8. 

(  f)  Liiiford  V.  Provincial  Horse  and  Cattle  Co.,  34  Beav.  291,  10  Jur.  N.  S. 
106(i,  11  L  T.  N.  S.  «30. 

a)  SnlintHV.  Lcferre,  11  L.  T.  N.  S.I  14. 
h)  New  Vork  Life  v.  Fletcher,  10  Davis  (Sup.  Ct.  U,  S.)  510. 
i)   mcnholt  V.  Jiobcrts,  '2  Camp  N.  P.  68(»  (1811).     Koster  v.  Eason,  2  E.  & 
S.  112 

(k)  Baker  v.  Lnnghorn,  4  Camp.  396. 

(/)  Montreal  Assurance  Co.  v.  }f' Gillivray,  13  Mooro  P.  C.  87-124,  8  W.  R. 
165. 

(w)  MofTat  V.  Reliance  Mutual  Life,  45  U.  C.  (Q.  B  )  561.  Neill  v.  Union 
Mutual  Life,  45  U.  C.  (Q.  IJ  )  503 


/««.  Co.  V.  Cusick,  10!)  Pa.  St.  157. 
atone  V.  Hawkeye  Ins.  Co.,  68  Iowa 
70  Iowa  608. 


Phenix  Ins,  Co  ,  v.  Allen,  100  Iiid.  278. 
737.    Donnelly  v.  Cedar  Rapids  Ina.  Co.^ 

835 


*425 


THE  LAWS  OF  INSURANCE. 


ti&n  to  contrary. — But  even  a  general  agent  cannot  extend  time  for 
payment  of  premiums  in  the  face  of  a  condition  in  tiie  policy  that 
no  waiver  of  any  condition  shall  be  valid  unless  made  at  the  head 
office  and  signed  by  an  officer  of  the  company  (n). 

General  agent  of  foreign  company  fully  represents  company  as  to  re- 
ceiving premiums. — If  the  company  is  a  foreign  company,  its  general 
agents  must,  for  the  purpose  of  receiving  premiums,  be  regarded  in 
the  same  light  as  the  company  itself,  and  knowledge  and  informa- 
tion brought  home  to  such  agents  lb  the  same  as  if  made  or  brought 
home  to  the  company  itself  (o). 

Agreement  by  director  to  pay  commission  to  agent  after  agency  ceasedJ^ 
It  is  not  within  the  power  of  directors  of  an  insurance  company  to 
agree  with  an  agent  (1)  for  continuance  of  payment  to  him  after  re- 
tirement from  the  agency  of  a  commission  on  premiums  on  policies 
effected  through  him  and  in  force  aX  his  retirement,  if  there  is  no 
stipulation  that  he  shall  continue  in  the  agency  for  a  stipulated 
time,  nor  that  the  commission  shall  cease  if  the  premiums 
[*  425]  cease  to  be  paid,  or  (2)  for  allowance  of  *commission  on  pre- 
miums to  nis  wife  and  children  after  his  death  in  the 
agency  (p).      ^ 

Director  appointed  to  select  agents  at  a  commission. — An  agreement 
appointing  a  director  of  a  life  assurance  company  to  select  agents 
and  medical  referees  for  the  company,  the  director  to  be  paid  a 
commission  on  policies  effected,  is  not  a  contract  of  service  within 
the  exceptions  to  s.  29  of  the  Joint-Stock  Companies  Act  (7  &  8 
Vict.  c.  110)^  which  enacts  that  all  contracts  between  directors  and 
companies  in  which  the  director  is  interested  are  void.  Conse- 
quently such  agreement  is  void,  and  such  director  can  recover 
nothing  on  it  (q). 

By  the  Joint-Stock  Companies  Act,  1862,  s.  57,  a  director  vacates 
his  office  if  he  is  concerned  in  or  participates  in  the  profits  of  any 
contract  with  the  company. 

Contract  by  director  in  fraud  of  company  void  against  purchaser  for 
valu£. — If  a  director  makes  a  contract  in  fraud  of  the  company  with 
a  person  cognizant  of  the  fraud,  Ruch  a  contract  is  void  even  in  the 
hands  of  an  assign  for  value  who  is  totally  innocent  of  the  fraud  (r). 

Larger  powers  of  agents  in  America  than  Ennland. — ^Tiie  larger 
powers  given  to  insurance  agents  in  the  United  States,  where  in 
many  cases  they  represent  their  companies  for  all  the  purposes  of 
an  insurance  business,  and  can  therefore  bind  them  to  an  almost 

(n)  Marvin  v.  Uhicersal  Life,  80  Am.  Rep.  657,  86  N.  Y.  278. 

(o)  Wilaony.  Genesee  Mutual,  16  Barl?.  (N.  Y.)  ClI.  Campbellr.  National 
Insurance  Co.,  24  U.  C.  (C.  P.)  188,  144.  Moffat  v.  Reliance  Mutual  Life,  46 
U.  C.  (Q.  B.)  661. 

{p)  Lewine's  Case,  Reillv  (Alb.  Arb)  174,  15  S.  J.  828.  MClure's  Claim,  5 
Ch.  App.  787,  89  L.  J.  Ch.  685,  23  L.  T.  N.  8.  685,  18  W.  R.  1122. 

(q)  Pitole  V.  National  provincial  Life,  27  L.  J.  Ex.  210. 

(r)  Athenaum  Life  Assurance  ▼.  PooUu,  8  De  0.  &  J>  294,  28  L.  J.  Oh.  110, 
1  Oiff.  102,  6  Jur.  N.  8. 12«. 

836 


Moore, 
(«) 
(«) 

{X) 

W.  R. 

(y) 

Case, 


AGENTS. 


*427 


unlimited  extent  within  the  scope  of  such  husiness,  render  the 
American  cases  generally  unsafe  guides  in  this  country,  where 
powers  of  a  much  more  limited  character  are  given  to  the  local 
agents  of  insurance  companies  (s). 

Ostensible  authority  not  qualified  by  private  instructiom. — Where  an 
agent  is  clothed  with  ostensible  autnoritv,  no  private  instructions 
can  prevent  his  acts  within  the  scope  of  that  authority  from  bind- 
ing his  principal;  where  his  authority  depends,  and  is 
known  by  those  ^dealing  with  him  to  depend,  on  written  [*  42G] 
mandate,  it  may  be  necessary  to  produce  or  account  for  the 
non-production  of  that  writing  in  order  to  prove  what  was  the 
scope  of  the  agent's  authority  (0. 

Extent  of  authority  of  agent  without  special  instructions. — An  agent 
who  answered  an  ad^^ertisement  for  agents  to  represent  an  insur- 
ance society,  and  received  a  reply  that  the  directors  had  appointed 
him  agent,  but  got  no  special  instructions  as  to  the  nature  of  his 
duties  or  the  extent  of  his  authority,  and  no  directions  as  to  re* 
ceiving  or  refusing  notices  of  withdrawal,  or  as  to  transmitting  in- 
formation thereof  to  head-quarters,  was  held  by  Vice-Chancellor 
Wood  a  sufficient  agent  for  the  purpose  of  receiving  such  notice,  so 
that  notice  to  him  would  be  notice  to  the  company,  and  the  person 
who  had  given  such  notice  was  held  entitled  to  be  struck  off  the 
list  of  shareholders  (u). 

Where  an  authorized  agent  to  whom  notice  is  given,  is  also 
solicitor  to  the  party  giving  it,  and  receives  the  notice  as  such 
solicitor  for  the  purpose  of  transmitting  it  as  agent,  the  notice  is 
effectual  in  both  capacities,  and  the  company  are  bound  though 
the  notice  be  not  in  fact  sent  to  them  by  their  agent  («). 

A  mere  casual  notice  will  not  suffice;  it  must  be  notice  to  the 
agent  as  agent  (x)  in  the  course  of  business  (y). 

Mistaken  instructions.  Company  bound  — An  agent  may  bind  his 
company  by  acting  on  instructions  erroneously  delivered,  and  a 
company  have  been  held  bound  by  an  adjustment  effected  by  an 
agent  instructed  by  telegram  to  decline,  which  word  was  in  trans- 
mission altered  into  "  decide  "(2)>  that  giving  him  ostensible  au- 
thority to  do  what  he  did. 

♦If  a  clerk  of  the  company  gives  a  receipt  for  a  premium,  [*  427] 


m 


(a)  Western  Assurance  Co.  v.  Provincial^  26  Grant  (U.  C)  561. 

(0  National  Bolivian  Navigation  Co.  v.  Wilson,  5  App.  Cas.  176,  209,  43 
L  T.  N.  8.  60,  per  Lord  Blackburn.  Montreal  Assurance  v.  M^Gillivray,  13 
Moore,  P.'C  87,  121,  8  W.  11.  106. 

(u)  Hawthorne's  Case,  31  L.  J.  Ch.  626. 

(«)  Gale  V.  Lewis,  16  L.  J.  Q.  B.  119,  10  W.  R.  572. 

(x)  Edwards  v.  Martin,  1  Eq.  121,  86  L.  J.  Ch.  186,  18  L.  T.  N.  S.  230,  14 
W.  11.  26.     Gale  v.  Lewis,  9  Q  B.  730. 

(y)  North  British  v.  Hallett,  7  Jur.  N.  S.  1208,. 9  W.  R.  880.  Hawthorne's 
Case,  surra  ■ 

(x)  Provincial  Co  v.  Hoy,  2  Sttipheiis  Quebec  Digest  400. 


22  POHTER  ON  INSURAMCB. 


337 


I 


im 


*428 


THE  LAWS  OF  INSURANCE. 


they  will  be  bound  even  if  no  policy  had  been  issued  at  the  time 
of  fire  (a). 

Agent  acting  through  sub-agent. — Although  an  agent  cannot  dele- 
gate his  authority,  there  are  many  things  which  he  may  do 
through  a  sub-agent,  and  which  are  valid  when  so  done ;  for  ex- 
ample, where  a  proposal  for  a  life  policy  was  accepted  on  behalf  of 
an  insurance  company  by  their  agent  abroad,  who  acted  in  the 
transaction  through  the  medium  of  a  sub-agent,  and  the  premium 
was  paid,  it  was  held  binding  on  the  company,  although  the  agent 
had  no  authority  to  appoint  a  sub-agent  (6). 

Company  hound  by  acta  of  aqent  where  intention  to  insure  in  another 
office. — Where  a  company  by  its  agent  receives  money  for  an  insur- 
ance, and  a  fire  happens  before  a  policy  is  issued,  the  company  will 
be  liable,  even  though  the  insured  intended  to  insure  in  another 
ofi[ice,  and  inadvertently  accepted  the  receipt,  supposing  it  to  be 
the  receipt  of  such  other  office.  Thus  W.,  as  agent  of  the  Commer- 
cial Union  Company,  accepting  an  insurance  by  M.  in  that  ofiice, 
W.,  without  M.  s  knowledge,  ceased  to  be  such  an  agent  and 
became  agent  for  the  European  Company,  and,  on  M.'s  application 
for  a  fresh  policy,  W.  gave  him  a  printed  receipt,  filled  up  for  a 
policy  for  a  month,  until  a  regular  policy  should  be  made  out.  M. 
did  not  at  first  discover  that  the  receipt  was  on  behalf  of  the  Euro- 
pean Company,  but,  when  he  did,  ne  wrote  to  W.,  saying  he 
should  require  to  be  satisfied  of  their  respectability  and  standing. 
Before  any  policy  w.is  made  out,  the  premises  were  burnt,  and  the 
European  office  refused  to  pay,  but  M.  was  held  entitled  to 
recover  (c). 

Credit  of  premium  to  agent,  company  not  bound  to  issue  policy. — 
Where  an  application  is  accepted  by  the  company,  but  the 
{*  428]  premium  only  credited  to  the  agent  in  the  *books  of  the 
applicant,  the  company  cannot  be  made  to  issue  a  policy 
or  pay  on  the  footing  of  its  issue,  if  prepayment  of  premium  is  an 
essential  and  there  be  no  proof  that  credit  was  intended  (d),  and 
the  sending  of  a  receipt  by  the  agent  without  actual  receipt  of  the 
money  will  not  complete  such  a  contract.  The  receipt  is  a  "  mere 
acknowledgement  in  abeyance  "  (e). 

Agent  to  insure  by  policy  on  payment  of  premium  cannot  insure  by 
parol  or  dispense  with  payment.  Payment  by  cheque  to  agent  whose 
banking  account  overdrawn  n0icient. — A  man  who  is  and  is  known 
to  be  an  a^ent  only  for  effecting  insurances  by  policy  on  payment 
of  a  premium  cannot  effect  a  parol  insurance,  nor  dispense  with 
prepayment  of  premium ;  and  if  he  does  such  acts  they  will  not 

(a)  ParS  v.  Scottish  Imperial  Co.,  2  Stephens  Quebec  Digest  410.     Duval  v. 
Northern  Co.,  do.  4!0. 

(6)  Roasiter  v.  Trafalgar  Life  Co.,  27  Beav.  377. 

(c)  Mackiev.  European  Co.,  21  L.  T.  N.  S.  102,  17  W.  R.  987. 

(d)  Walker  v.  Provincial,  7  Grant  (U.  C)  ^7,  8  Grant  (U.  C)  217. 

(e)  8  Grant  (U.  C)  210,  per  Robinson,  CJ. 

338 


AGENTS. 


*429 


bind  the  company  (/),  but  will  be  ultra  vires  and  void  as  notbein'g 
within  the  scope  of  his  authority.  Where  a  premium  due  was 
paid  by  cheque  to  B.,  an  agent  of  the  insurers  authorized  to  receive 
premiums,  and  the  cheque  was  credited  to  B.'s  account,  which  was 
overdrawn,  this  was  held  pavment  to  the  company,  and  the  com- 
pany could  not  either  avoid  the  policy  or  maintain  an  action  for 
the  premiui*:.  The  cheque,  of  course,  was  honoured  (g),  and  an 
agent,  of  course,  is  only  bound  to  hand  over  an  equivalent,  not  the 
money  received  (h). 

Agent  insuring  himself. — An  insurance  agent's  authority  does  not 
empower  him  to  grant  an  insurance  in  his  own  favour  binding  on 
his  princi;^^l8,  even  if  it  be  a  second  insurance^and  the  prior  policy 
has  Deen  granted  with  the  express  sanction  and  approval  of  the 
company.  His  business  is  to  represent  the  insurance  company  in 
deahng  with  others.  In  insuring  himself  he  would  have  to  act  in 
two  capacities  (t). 

*Agent  cannot  insure  himself  against  fire  beyond  company's  [*  429] 
limit. — Even  where  an  agent  is  allowed  to  insure  himself 
with  the  company  for  which  he  is  agent,  he  cannot  so  insure  for  a 
sum  exceeding  the  limit  fixed  by  the  rule  of  the  company  {k). 

Agent  taking  assignment  of  policy  and  crediting  company  with  pre- 
miums aft£r  forfeiiure. — If  an  agent  takes  an  assignment  of  a  policy, 
and  credits  the  company  with  the  premiums  after  forfeiture  has  oc- 
curred, the  policy  will  be  invalid,  but  an  action  will  lie  at  law  for 
their  return  if  the  forfeiture  is  enforced  {t).  ; 

Agent  taking  out  policy  in  which  he  was  interested  without  disclosing 
such  interest,  policy  was  void. — An  authorized  agent  of  an  insurance 
company  received  and  accepted  an  application  and  negotiated  an 
insurance  as  agent  on  property  of  whicn  he  was  one  of  the  owners, 
and  communicated  the  transaction  to  his  principal  without  disclos- 
ing his  interest,  and  on  receiving  the  policy  handed  it  to  the  person 
named  in  the  policy  as  being  assured  thereby.  The  policy  was  on 
that  ground  held  void,  and,  the  contract  being  one,  other  interests 
fell  too  (m). 

Communicaf.ums  between  insurers  and  aaeni  when  privileged. — There 
seems  to  be  some  authority  for  saying  that  the  communications  be- 
tween the  insurers  and  their  agent  are  privileged  if  they  form  part 
of  the  preliminary  investigation  of  the  insurers  made  with  reference 
to  the  case  (n). 

(/)  Montreal  Assurance  Co.  v.  ATGitlivray,  18  Moore  P.  C.  87,  124,  8 
W.  R.  166. 

(fl)  Etna  Life  Co.  v.  Green,  88  U.  C.  (Q.  B.)  469. 

(A)  See  Bridges  v.  Garrett,  L.  R.  5  C  P.  461,  89  L.  J.  C.  P.  231,  23  L  T.  N. 
S.  448,  18  W.  R.  816. 

ii)  White  V.  Lancashire  Insurance  Co.,  27  Grant  (U.  C)  61. 

(k)  Tucker  v.  Provincial  Insurance  Co.,  7  Grant  (U.  C.)  122. 

(/)  Busteed  v.  West  of  England  Co.,  6  Ir.  Ch.  658. 

(m)  Ritt  V.  Washington  Marine,  41  Barb  (N.  Y.)  858. 

In)  Pacific  Mutual  Co.  v.  Butters,  17  Lr.  Can.  Jur.  809.  See  Baker  v.  L.  S. 
W.  k,  L  K.  8  Q.  B.  91,  87  L.  J.  Q.  B.  58,  16  W  R.  126.  Grant  v.  Etna  Co., 
11  Lr.  Cau.  Rep.  128. 

839 


430 


THE  LAWS  OF  INSURANCE. 


'  Agents  for  two  companies  have  power  to  re-insure  one  in  the  other. — An 
agent  for  I've  insurance  companies  having  authority  from  one  to 
accept  marine  risks  to  an  amount  not  exceeding  $5000,  accepted  a 
manne  risk  for  $7700  in  favour  of  that  company,  but  re-insured  for 
$2700  in  the  other,  and  directed  a  clerk  to  enter  a  memorandum  to 
that  effect  in  the  books  of  the  second  company,  but  gave  no 
[*  430]  notice  to  that  company  until  after  a  loss  *occurrtd.  The 
re-insuring  company  was  held  not  entitled  to  recover  bade 
the  amount  of  re-insurance,  if  paid  by  the  agent  on  a  loss,  without 
proof  that  the  agent  acted  mcUa  fide  in  affecting  the  insurances,  or 
did  not  conform  to  the  rules  of  his  principals  known  to  the  re-as- 
sured (o). 

Settlement  of  premtums  in  monthly  account  between  two  agents — A 
practice  of  the  agents  of  two  companies  to  effect  re-insurances  with- 
out immediate  payment  of  premiums,  but  on  a  monthly  balance  of 
accounts  unsanctioned  by  the  company,  and  whereof  they  had  no 
notice,  this  re-insurance  account  not  being  sent  up  to  head-quarters, 
is  not  binding  on  the  companies  (  p). 

Courts  inclined  to  support  insurance,  though  heal  agent  r>  "  .tc% 
within  authority. — Fire  and  life  assurances  are  carried  on  ^^  .,».  enor- 
mous extent  tnrough  local  agencies,  and  not  by  direct  dealings  with 
the  officers  of  the  companies  at  their  head-quarters  (</).  It  is  con- 
sequently of  the  highest  importance  to  those  dealing  with  such 
agent:*,  and  the  Courts  are  inclined  to  insist,  that  the  assured  should 
not  run  the  peril  of  the  agent  neglecting  strictly  to  perform  his  duty 
(r).  For  if  a  policy  is  to  be  held  vitiated  because,  in  a  manner  of 
which  the  assured  is  ignorant,  the  agent  goes  beyond  his  authority, 
no  insurance  effected  through  an  agent  would  be  safe  (s).  In 
America,  however,  the  Courts  have  gone  so  far  as  to  hold  that  where 
the  insurance  agent  wrote  out  the  particulars  of  a  proposal,  and 
made  a  false  representation  as  to  the  facts  of  which  the  assured  told 
him  the  truth,  the  assured  could  not  prove  his  parol  statement  as 
against  the  written  falsehood,  and  could  not  therefore  enforce  the 
policy  (0  (*).  The  agent  doing  this  was,  however,  by  stipulation, 
the  agent  of  the  assured  (•). 


(o)  Canada  Insurance  Co.  v.  Western  Insurance  Co.,  26  Grant  (U.  C.)  264. 

(p)  Western  Assurance  Co.  v.  Provincial  Insurance  Co.,  26  Grant  (U.  C.)  561. 

(q)  Mackie  v.  European  Co,  21  L.  T.  N.  S.  102,  17  W.  R.  587. 

(r)  Wing  v.  Harvey,  5  De  G.  M.  &  U.  265,  28  L.  J.  Ch.  511,  28  L.  T.  0.  S. 
120,  18  Jur.  894.  2  W.  R.  879. 

(s)  Mackie  v.  European  Co.,  ubi  supra. 

(0  Ji'hrbachy.  German  Fire  Ins.  Co.,  20  Am.  Rep  451,462,  but  see  <Sfwan 
V.  WatertowH  Ins.  Co.,  06  Penn.  87  (1880).  Planters  Co.  v.  Myers,  80  Am.  Rep. 
521. 

*  Company  held  liable  where  the  agent  made  fase  answers  in  filling  up  the  ap. 

Slication.     Sullivan  v.  Phenix  Ins.  Co.,  84  Kan.  170.    Mullin  v.  Vermont  Mut. 
ns.  Co,  58  Vt.  118.     Eggleston  v.  Council  Bluffs  Ins.   Co.,  65  Iowa  808. 
Breckenridge  v.  American  Central  Ins-  Co.,  87  Mo.  62.     Susquehanna  Mut.  F. 
Ins.  Co.  V.  Cuseck,  109  Pa.  St.   157.     Phenix  Ins    Co.  ▼.  Allen,  109  Ind.   278. 
Stone  V.  Hawkeye  Ins  Co.,  08  Iowa  787. 
'  Au  agent  of  the  insurance  company  is  not  to  be  deemed  the  agent  of  the  as* 

340 


AGENTS. 


*432 


^Agreement  to  grant  policy  may  be  specifically  performed.  [*  431] 
Local  agetU  cannot  bind  company  to  grant  policy.  Powers  of 
Utcal  agent. — Specific  performance,  it  would  seem,  may  be  had  of  an 
agreement  to  grant  a  policy  of  assurance,  provided  that  the  agree- 
ment be  made  on  behalf  of  the  company  by  an  agent  properly 
qualified  to  do  so  and  acting  within  the  scope  of  his  authority. 
But  an  ordinary  local  agent  has  no  authority  to  enter  into  a  con- 
tract to  grant  a  policy  without  the  sanction  of  the  dirtctors  of  the 
company.  •  He  is  merely  an  agent  to  receive  and  submit  proposals 
made,  and  to  inform  the  applicant  of  the  decision  of  the  directors 
on  his  proposal.  He  cannot  on  receiving  the  premium  say  with 
binding  effect  that  a  policy  shall  be  granted.  And  if  an  applicant 
trusts  such  an  agent  and  pays  him  the  premium  before  receiving 
the  policy,  he  has  no  equity  to  obtain  a  policy.  It  would  be  other- 
wise probably  with  a  renewal  premium  paid  to  such  agent,  whose 
receipt,  unless  otherwise  stipulated,  would  be  a  good  discharge  to 
the  assured.  If  the  premium  gets  to  the  company's  handd,  and 
(from  whatever  reason)  they  are  not  bound  to  issue  a  policy,  they 
mui?t  return  the  premium  (w). 

Authority  to  receive  applications  is  not  authority  to  accept  them. — Power 
to  solicit,  receive,  and  report  applications  will  not  imply  power  to 
accept  them  or  bind  the  company,  his  principals,  by  stating  that 
the  right  attached  at  a  certain  moment  (x).  Such  an  agent  would 
not  earn  his  commission  till  the  company  had  inspected  the  prop- 
erty, or  otherwise  decided  on  the  character  of  the  risk,  and  would, 
in  fact,  be  a  mere  person  employed  to  obtain  business.  Authority 
to  receive  premiums  does  not  authorize  giving  credit. — Even  if  he  has 
power  also  to  receive  or  remit  premiums,  this  will  not  entitle  him 
to  give  credit  for  the  renewal  premium  beyond  the  time  limited  in 
the  policy  (y). 

Company  bound  by  local  aget^t  acting  with  authority. — The 
local  agent  of  an  insurance  company  must  be  *treated  as  [*  432] 
their  officer  to  communicate  with  persons  effecting  insur- 
ances, and  what  he  says  or  does  in  that  capacity  within  the  proper 
bounds  of  his  authority  must  be  held  binaing  on  the  company  (z). 

Notice  to  a  local  agent. — Delivery  to  local  agents  of  notice  of  fire 
is  sufficient  within  a  condition  requiring  notice  to  the  company 
unless  the  policy  otherwise  stipulates  (a)  (•). 

sured  because  a  by-law  of  the  company  so  provides.    Nassauer  v.  Susqaehanna 
Mut  F  Ins.  Co.,  109  Pa.  St  507. 

(w)  Linford  v.  Provincial  Cattle  Co.,  It  L.  T  N.  S.  330,  5  N.  R.  ?9,  10  'Jur. 
N.  S.  1006,  84  Beav.  291.  Henri/  v.  Agricultural  Mutual  Insurance  Co  ,  11 
Grant  (U.  C.)  12o      1  Lindley  on  Partnership  248. 

ix)  Stockton  V.  Fireman's  Ins.  Co,  89  Am.  Rep.  277,  33  La.  Am.  577. 

(y)  Ciitchett  v.  American  Insurance  Co.,  8ft  Am.  Rep.  ?30,  58  Iowa  404,  and 
American  cases  there  collected.     Bmteed  v.  W.  of  England,  6  Ir.  Ch.  553. 

(2)  Penlev  v.  Beacon  Ins.  Co.,  7  Grant  (U.  C  )  130. 

(a)  Peppittv.  North  British  and  Mercantile  (1«79),  1  Russ.  &  Gedd.  (Nov. 
Sco.)  219.     Butterworth  v.  Western  hmirance  Co.,  182  Mass.  489 

*•  Notice  to  solicitiiig  agent  that  applicant  keens  gunpowder  on  premises  is  not 
notice  to  company.    Liverpool  ds  L>  as  0<  Lis.  Co.  v.  Van  Oa.,  63  Miss.  431. 

341 


I 


i' 


*    l!il 


*433 


THE  LAWS  OP  INSURANCE. 


Where  notice  to  be  given  to  head  offlce,  notice  to  local  agent  insvffident. 
— Notice  to  a  local  agent  will  be  useless  when  the  notice  ought  to 
be  given  at  the  head  office  (6).  Verbal  notice  will,  however,  suffice 
if  not  stipulated  against  (c). 

Verbal  notice  generally  sufficient  notice  to  agents. — Notice  to  an  agent 
if  he  has  power  (d)  to  receive  such  notice  will  bind  the  company, 
even  though  the  agent  received  such  notice  in.  a  different  capacity, 
and  never  communicated  it  to  his  principals  (e).  Mere  knowledge 
privately  obtained  by  a  party  connected  with  the  coihpany  will 
not  suffice  (/).  The  notice  as  regards  fire  policies  need  not  be  in 
writing  ((jr)  unless  so  stipulated. 

Notice  to  directors. — Notice  to  directors  must  be  give  to  them  as 
such  Qi). 

Waiver  o^  forfeiture  by  receipt  of  premiums. — An  agent,  of  course, 
cannot  waive  a  forfeiture  (i)  in  the  face  of  a  condition  in  the  policy 
that  it  shall  not  attach  until  the  premium  is  paid,  and  that  only 
the  president  or  secretary  should  waive  a  forfeiture  (Jt)  ('). 

But  if  the  directors  receive  premiums  through  a  local  agent 
after  a  forfeiture,  the  policy  will  be  valid  (/). 
[*433]  *  Waiver  of  forfeiture  by  agent  by  receipt  of  overdue  pre- 
mium.— Although,  as  a  rule,  an  agent  cannot  waive  a 
forfeiture,  it  may  be  done  under  special  circumstances,  as  in  the 
following  case : — By  the  non-payment  of  renewal  premium  at  the 
stipulated  time  a  policy  of  life  insurance  became  forfeited.    The 

Eolicy  j)rovided  that  payment,  if  made  when  overdue,  would  not 
e  considered  as  continuing  the  policy  unless  the  insured  was  in 
good  health  at  the  time,  but  by  the  practice  of  the  company  the 
agents  might  receive  payment  of  such  premiums  and  issue  the 
renewal  receipts  within  thirty  days  after  the  stipulated  time,  pro- 
vided the  insured  were  then  in  good  health.  Meaning  of  proviso  as 
to  insured  being  "  in  good  health." — It  was  held  that  the  proviso  us 
to  the  insured  being  in  good  health  did  not  apply  to  his  actual 
state,  but  to  the  general  understanding  of  the  parties  and  their 
consequent  action  thereon.  We,  therefore,  at  the  time  of  paying 
the  premium  to  and  the  giving  of  the   receipt  by  the  agent, 


(6)  Hendrickaon  v.  Queen  Insurance  Co.,  81  U.  C.  (Q.  B  )  547. 

r«)  North  Brisish  Insurance  v.  Hallett,  7  Jiir.  N.  S.  1263,  9  W.  R.  880. 

\d)  Ex  parte  Hennesei/,  1  Connor  &  Lawsoii  (Ir.)  559. 

(c)  Gale  V.  Lewis,  9  Q.  B  730,  16  L.  J.  Q.  B.  119. 

(/)  Thompson  v.  Speirs,  13  Sim.  469. 

Ig)  Gale  v.  Lewis,  supra,  where  no  written  notice  was  given. 

(h)  Hawthorne's  aaim,  31  L.  J.  Ch  625,  6  L.  T.  N.  S.  574,  10  W.  R.  572. 

(i)  Jacobs  V.  Emiitabte,  17  U.  C  (Q.  B  )  36  18  do.  14,  19  do.  260.  , 

(k)  Calhoun  v.  t/jwott  Mutual  (1879),  3  Pugsley  &  Burb.  (New  Bruns.)  13,  28. 
Butterworth  v.  Western,  132  Mass.  49. 

(I)  Wing  V.  Harvey,  6  De  G.  M.  &  G.  205,  28  L.  J.  Ch.  6tl,  18  Jur.  894,  23 
L.  T.  120,  2  W.  R.  870 

^  Agent  cannot  waive  as  to  matters  concerning  which  policy  distinctly  states 
that  he  shall  not.  Enos  v.  Sun  Ins.  Co.,  67  Cat.  621.  Unless  policy  provides 
otherwise,  insured  is  justified  in  supposing  company's  agent  to  have  autuority  to 
waive  a  forfeiture.    Silverber  v.  Fnenix  Ins.  Co.,  67  Cal.  86. 

342 


AGENTS. 


*434 


the  insured  had  in  fact  received  an  injury  which  soon  after  resulted 
in  death,  but  it  clearly  appeared  that  no  danger  was  anticipated 
by  either  the  insured  or  his  medical  attendant,  or  by  the  company 
themselves^  who  had  made  inquiry  and  had  full  knowledge  of  his 
condition,  it  was  held  that  the  payment  was  good  and  the  for- 
feiture waived  {l). 

Inspector  cannot  dispense  with  prohibitory  condituyns. — An  inspector 
of  risks  cannot  dispense  with  conditions  relating  to  the  keeping  of 
prohibited  or  highly  hazardous  goods  either  at  all  or  largely  in 
excess  of  the  allowable  quantities,  or  to  a  mis-description  of  the 
mode  of  heating  or  the  precautions  required  in  case  of  steam  being 
used,  or  with  respect  to  chimneys  or  stove  pipes,  or  the  deposit  of 
ashes,  or  the  proximity  of  dangerous  places  (m). 

Effect  of  companies  of  their  agents  filling  up  applications. — If  in 
every  case  the  proposals  for  a  contract  of  insurance  emanated  from 
the  would-be  assured,  probably  no  question  could  arise  as  to  the 
dealings  of  insurance  agents  with  such  applications.  But  often, 
(and  especially  in  America  and  the  colonies)  the  companies' 
agents  solicit  insurance  and  fill  in  applications  of  the 
♦assured,  and  much  litigation  has  arisen  and  many  pre-  [*  434] 
cautions  have  been  taken  by  the  companies  to  avoid  the 
consequences  of  such  act  on  the  part  of  the  agents.  In  some  cases 
it  is' declared  that  if  the  agent  fills  in  the  proposal  he  shall  be 
deemed  the  applicant's  agent.  In  others  he  is  privately  f«)rbidden 
to  fill  in  the  pro{)osal.  In  the  former  case  the  insurer  is  exempted 
from  (n)  the  liability  for  his  agent's  mistakes  which  would  otner- 
erwise  full  on  him  (o). 

Even  where  an  agent  is  made  the  agent  of  an  applicant  for  the 
purpose  of  filling  in  the  proposals,  this  will  not  in  every  case  bind 
the  assured  to  what  the  agent  puts  down.  Thus  where  the  assured, 
to  the  question  of  incumbrances,  began  to  tell  about  a  mortgage, 
but  was  stopped  by  the  agent,  who  said  this  was  immaterial,  the 
insurances  being  on  chattels,  and  the  agent  wrote  down  for  an  an- 
swer *'  None,"  the  Court  of  Common  Pleas  in  Upper  Canada  held 
that  the  insured  had  made  no  misrepresentation  and  could 
recover  (p). 

Effect  of  war  on  foreign  agency. — The  authority  of  an  agent  ap- 
pointed by  the  general  agent  and  local  board  of  directors  in  the  city 
of  New  York  of  an  English  insurance  company  was  held  not  revoked 
or  suspended  by  the  existence  of  the  state  of  war  arising  from  the 

(I)  Campbell y.  National  Life  Co.,  24  U.  C  (C.  P.)  133. 

(m)  Mason  v.  Hartford  Fire  Co.,  37  U.  C.  (Q.  B.)  487,  441. 

(n)  Naughter  v.  Ottowa  Agency  Insurance  Co.,  43  U.  C  (Q.  B)  121.  Sowden 
V.  Standard  Insurance  Co.,44  U.  C.  (Q.  B.)  95.  Blakeley  v.  Niagara  District 
Mutual  IHre  Insurance  Co.,  16  Grant  (U.  C.)  198.  ISomers  v  Athenceum  Co., 
9  Lr.  Can.  Rep.  61,  8  Lr.  Can.  Jur.  67. 

(o)  Parsons  v.  Bignold,  13  Sim.  518,  16  L.  J.  Ch.  879,  7  Jur.  691.  Ex  parte 
Forbes  Js  Co.,  19 Eq.  486,  44  L  J.  Ch.  761,  23  W.  R.  464 

(p)  Aahford  v.  Victoria  Mutual  Ina.  Co.,  20  U.  C  (C.  P.)  434. 

343 


!:l;''liil 


*436 


THE   LAWS  OF  INSURANCE. 


secession  of  the  Southern  States.  But  this  went  on  the  ground  that 
the  insurers  were  domiciled  abroad,  and  the  New  York  board  were 
merely  their  agents  with  a  revocable  authority  (q).  The  contract 
of  agency  was  with  a  ))rincipal  of  neutral  domicile,  and  therefore 
unaffected  by  the  war  (r).    Payments  of  premiums  to  such  agents 

after  war  begun  would  bind  the  insurers  (s). 
['i'  435]     *  What  indoraenients  agent  can  make. — In  England  agents  of 

fire  insurance  companies  are  usually  authorized  to  make  in- 
ddrsements  on  policies  in  case  of     ■ 

(a)  Removal  (t). 

(b)  Transfer  of  the  sum  assured  to  a  like  risk. 

(c)  Permission  to  insure  in  another  office. 

(d)  Alteration  of  the  name  of  the  assured  if  it  be  incorrectly  stated 

in  the  policy. 

(e)  Change  of  firm. 

(f)  Notice  of  a  mortgagee's  interest  in  a  policy  or  of  a  change 

thereon. 

(g)  Marriage,  purchase  (w),  or  gift. 

In  case  of  sale,  satisfactory  evidence  will  be  required  of  the  as- 
sent of  the  assured. 

Interim  receipts  cannot  be  signed  by  agerWs  agent- — The  agent  of  an 
insurance  company  authorized  to  si^zn  interim  receipts  for  premiums 
cannot  delegate  his  functions,  and  if  he  engages  another  person  to 
take  risks  for  him,  interim  receipts  signed  by  the  latter  do  not  bind 
the  company,  unless  by  the  subsequent  ratification  on  the  part  of 
the  company  or  its  agents  (a;). 

Contracts  of  insurance  by  agents  generally  valid  until  needed. — If  an 
agent  has  power  to  enter  into  contracts  of  insurance  which  may  or 
may  not  be  approved  at  head-quarters,  they  are  valid  till  receipt  of 
notice  of  rejection  and  return  of  premiums  paid,  and  it  seems  to 
make  no  difference  if  the  agent  employs  sub-agents  in  getting 
assurances.  If  he  Joes,  their  receipt  for  premiums  binds 
[*  436]  *the  agent  as  much  as  if  signed  by  him  (y).  For  though 
an  agent  cannot  delegate  his  authority  to  "  another  person, 
he  is  entitled  to  perform  and  must  perform  a  great  number  of  his 
acts  and  functions  through  the  aid  of  persons  to  whom  he  delegates 
his  authority;  and  acts  done  by  such  aid,  if  proper  and  within  the 
pcope  of  his  authority,  will  be  nis  acts"  (z). 

Company  liable  for  agenCs  fraud. — An  insurance  company  may  be 
liable  for  the  fraud  of  their  agents  acting  within  the  scope  of  their 

(q)  Robinson  v.  International  Life  Ins.  Co.,  42  N.  Y.  64 

(/•)  Ibid.     Setonv.  Law,  1  Johnson  (N.  Y.)  1. 

(s)  Martin  v.  International  Life,  62  Barbour  (N.  Y  )  181. 

(/)  Chalmers  v.  Mutual  Fire  Co.,  8  Lr.  Can,  Jur.  2. 

(m)  Frost  V.  Liverpool,  London,  and  Globe,  2  Hannay  (New  Bruns  )  378. 

(x)  Summers  v.  Commercial  Union,  0  Canada  (S.  C)  19.  But  see  Rossiter  v. 
Trafalaar  Life,  27  Beav.  377. 

(y)  Rossiter  \.  IVafiilgar  Life  Co.,  27  Beav.  877,  aflFd.  on  appeal.  Mackie  v. 
European  Co,  21  L.  T.  N.  S   102, 17  W.  R.  987. 

(2)  Rossiter  v.  Trafalgar  Life  Co.,  27  Beav.  377,  381. 

•       344 


AGENTS. 


437 


authority,  at  least  to  the  extent  of  the  gains  of  the  company  ob- 
tained by  the  agent's  act.  This  liability  seems  to  be  based  on  the 
ground  that  "every  person  who  authorizes  another  to  act  for  him 
in  the  making  of  any  contract  undertakes  for  the  absence  of  fraud 
in  that  person  in  the  execution  of  the  authority  given  as  much  as 
he  undertakes  for  its  absence  in  himself  when  he  makes  the  con- 
tract "  (a).  The  agent  and  principal  will  in  such  a  case  both  be 
liable  (6),  and  the  same  would  be  the  case  if  a  sub-agent  commits  a 
fraud  and  the  agent  profits  by  it  (c). 

Company  not  liable  for  fraud  of  agent  outside  company's  budness. — 
But  no  liability  falls  upon  an  insurance  company  for  fraud  or  mis- 
representation of  the  secretary  or  any  other  agent  outside  the  busi- 
ness of  the  company  or  the  ordinnry  scope  of  his  duties  (d). 

Company  compellable  to  issue  prdicy' if  premium,  paid. — If  an  interim 
receif)t  be  delivered  by  an  agent  ixxhy  authorized  thereto  (e),  and 
containing  a  promise  to  issue  a  policy  in  so  many  days  (/),  and  the 
insurers  neither  do  so  in  the  time  nor  refund  the  premium, 
they  *will  be  held  bound  as  if  they  had  issued  the  policy  [*  437] 
(g),  or  be  made  to  issue  the  policy  (k)  (*). 

Company  cannot  adopt  contract  by  ny%.nt  outside  its  business. — An  in- 
surance company  cannot  adopt  contracts  made  by  its  agents  which 
are  not  within  the  scope  of  the  company's  business.  Thus  a  com- 
pany formed  for  life  assurance  cannot  undertake  marine  assurance, 
and  even  if  contracts  of  marine  assurance  are  granted  and  for  a 
time  treated  as  binding,  the  Courts  will  not  allow  recovery  thereon, 
but  will  order  the  premiums  to  be  repaid  or  allow  them  to  be 
proved  for  in  the  winding  up  (t). 

Company  cannot  adopt  policies  of  another  company  so  empowered. — 
Nor  can  one  company  aao[)t  the  policies  granted  by  another  com- 
pany, unless  powers  in  that  behalf  are  given  in  the  deed  of  settle- 
ment and  executed  conformably  therewith  (j). 

Company  can  ratify  where  contract  within  its  powers,  though  beyond 


(a)  Per  Bramwell,  L  J.,  in  Weir  v. 
88  L.  T.  N.  S.  929,  26  W.  R.  746. 

(b)  Per  Cockburn.  C.  J    ' 


Bell,  8  Ex.  D.  288,  245.  47  L.  J.  Ex.  704, 


,  in  same  case,  p.  248. 

(c)  Cnllen  v.  Thomson^ s  Trustees,  4  Macqueen  H.  L.  424. 

(d)  Partridge  v.  Albert  Life  Co.,  16  S.  J.  199.  Pinchin  v.  Realm  In.<t.  Co., 
C.  A.  (Feb.  1884).     Giffard  v.  Queen  Ins.  Co.,  1  Hannay  (New  Bruns.)  452. 

(e)  Mead  v .  Davidson,  3  A.  &.  E.  f  03,  309. 

( f)  Mackie  v.  European  Co.,  21  L.  T.  N.  8.  103,  17  W.  R.  987. 
(o)  Patterson  v.  Rorjal  Ins.  Co.,  14  Grant  (U  C)  169. 

(A)  Albion  v.  MilU  Ins.  Co.,  4  C  S.  C.  (1st  series)  575,  8  W.  &  S  (Sc)  218. 
1  Dow  &  CI.  H.  L.  842.  Christie  v.  North  British  Ins.  Co.,  8  C.  S.  C.  (1st 
series)  519.     Mead  v.  Davidson,  supra,  note  (e). 

(t)  Re  Phoenix  Life  Ini.  Co.,  Burgess  and  Stock^s  Case,  2  J.  &  H.  441,  81  L. 
J.  Ch.  749,  low.  R.  816. 

(  i )  Era  Assurance  Co.,  1  De  G.  J.  &  S.  29,  2  J.  &  H.  400,  1  H.  &  M.  67:.',  80 
L.  J.  Ch.  137,  3  L.  T.  N.  S.  814,  9  W.  R.  67,  11  W.  R.  204,  820. 

»  Agent  made  out  a  policy  to  A  ,  and  placed  same  in  hands  of  a  third  party 
unt'l  compa-iy  would  accept  risk.  The  company  refused  to  accept  risk  Held — 
No  delivery  of  policy,  although  agent  provisionally  received  the  premium  from 
A.    Bromi  v.  American  Central  Ins.  Co.,  70  Iowa  890. 

345 


11 


438 


THE    LAWS  OF  INSUBANCE. 


be  ratified  by  the  directors — those  which  they  could  themselves 
have  made.  Some  which  even  they  cannot  ratify  may  be  ratified 
bv  the  shareholders,  if,  though  outside  the  authority  of  tho 
durectors,  they  are  permissible  by  the  constitution  of  the  insurance 
company. 

Where  a  local  agent  agrees  to  grant  a  policy,  receives  and  remits 
the  proposal  and  premium,  and  uie  directors  accept  the  premium, 
this  will  amount  to  ratifying  the  agreement  (k).  In  England  they 
are  bound  under  penalty  to  issue  a  policy  within  twenty-one  days 

of  receiving  the  premium  (t). 
[*  438]  ^Company  can  ratify  after  loss. — ^Where  a  policy  has  been 
effectea  by  an  agent  without  authority,  it  may  be  ratified 
by  the  principals  even  after  a  loss  has  happened.  This  rule  is  well 
established  as  to  marine  insurance,  though  it  does  not  accord  with 
the  general  principle  that  ratification  can  only  be  efiectual  when 
he  who  ratines  could  at  the  time  when  he  so  ratified  have  made 
the  original  contract  (m).  And  there  seems  no  reason  why  the 
rule  should  not  apply  to  insurance  other  than  marine ;  but  since 
it  is  mainly  based  on  mercantile  custom  and  convenience,  it  is 
somewhat  doubtful  whether  it  would  be  applied  by  the  Courts  to 
insurances  not  purely  commercial.  Rati^ation  after  loss  hyfire  in 
Canada. — This  nas,  however,  been  done  in  Canada,  where  it  has 
been  held  that  an  assured  could,  after  loss  by  fire,  ratify  a  policy 
efiected  for  him  in  a  company  other  than  that  to  which  he  had 
applied  and  the  analogies  of  marine  insurance  followed  (n). 

Katification  of  insurance  on  behalf  of  another. — Where  a  person 
not  himself  interested  in  a  thing  insures  it,  or  directs  its  insurance 
on  account  of  (o),  or  intends  the  insurance  to  protect  the  interest 
of,  a  person  really  interested  (p)  the  latter  may  ratify  the  act  of  the 
former,  and  adopt  the  policy  and  take  the  benefit  thereof  {q) ;  but 
if  such  nn  insurance  was  not  on  behalf  of  and  ratified  by  another, 
it  would  be  void  for  want  of  interest  (r). 

A  Danish  ship,  after  an  embargo  had  been  laid  on  Danish  shipi 
by  an  Order  in  Council,  but  before  such  order  came  to  the  kno 
edge  of  the  captors,  was  captured  on  speculation  by  a  British  ves. 
agmVa  authority. — But  where  a  policy  is  intra  vires,  so  far  as  tlio 
company  is  concerned,  though  not  within  the  scope  of  the  agenVs 
authority,  the  company  can  ratify  the  policy.      Some  policies  may 

(Jk)  Patterson  v.  Royal  Ins.  Co.,   14  Grant  (U.  C.)  169. 

(l)  33  *  84  Vict.  c.  97,  8.  118  (1). 

(m)  Williams  v.  North  China  Insurance  Co.,  1  C.  P.  D.  757,  85  L.  T.  N.  S. 
884. 

(n)  CHffard  v.  Qtieen  Insurance  Co.,  1  Hannay  (New  Bruns.)  482. 
Montreal  Fire  Co.,  8  U.  C.  (C  P.)  497,  a  very  full  case. 

(o)  14  Geo.  III.  c.  48,  s.  2. 

(p)  Ogden  v.  Montreal  Ins.  Co.,  3  U.  C.  (C.  P.)  497. 

(q)  Lucena  v.  Crawfivrd,  2  B.  &  P.  269,  1  Taunt.  326. 
1  B.  &  P.  816.     Stirling  v.   Vaughan,   11   East  619. 
Eazt  274 

(r)  Bouth  V.  Thomas  (1811),  18  East  274,  285. 

346 


Ogden  v. 


Wolff  V.  Horncastle, 
Routh  V.  Thomas,  18 


son 


I  ill 


AGENTS. 


*440 


of  war.  The  prize  was  injured  by  direction  of  the  captors 
in  a  *policy  for  the  benefit  of  all  concerned.  The  Court  [  *439] 
held  that  the  policy  enured  to  the  benefit  of  the  King,  who 
had  the  right  to  adopt  and  did  adopt  the  capture,  and  who  had  by 
the  captors  lawful  possession  of  the  prize,  and  who,  if  possession 
had  been  wrongfully  taken,  would  have  been  bound  in  honour  to 
make  restitution  or  compensation  to  the  injured  party  («).  If  the 
policy  had  been  made  on  account  of  the  captors,  it  would  have 
been  void  for  want  of  interest  (0,  since  they  could  only  capture 
lawfully  for  the  King,  or  the  seizure  was  piratical  (w). 

Effect  of  direction  to  insure  on  another's  account. — And  in  the  same 
case  it  was  decided  that  direction  to  insure  property  on  A.'s  account 
does  not  amount  to  an  allegation  thd,t  A.  has  interest  in  the  prop- 
erty, but  only  to  a  direction  to  insure  for  the  benefit  of  those  con- 
cerned, and  charge  the  premiums  in  account  with  the  person  di- 
recting the  insurance.  Such  direction  must  be  for  those  concerned, 
and  within  the  scope  of  such  an  agent's  agency,  and  in  the  particu- 
lar case  the  agent  was  held  to  be  an  agent  on  behalf  of  the  Crown, 
being  appointed  to  act  by  servants  and  agents  of  the  Crown  re- 
sponsible to  the  Crown  for  the  captured  vessel,  and  having  them- 
selves no  interest  of  their  own  therein  in  respect  of  which  they 
could  appoint  an  agent  (x). 

Insurance  for  another  without  authority. — Hagedom  v.  Oliveraon  (i/) 
is  an  extreme  instance  of  the  same  rule.  The  Court  there  decided 
that  a  man  had  a  right  to  effect  a  policy  on  the  chance  of  its  being 
adopted,  certuinly  for  those  actually  interested,  and  possibly  for 
those  who  might  subsequently  become  interested,  and  that  a  per- 
son interested,  though  it  was  purely  optional  with  or  at 
most  only  morally  binding  upon  him  to  adupt,  could  *by  [*  440] 
doing  so  become  privy  to  the  policy  and  sue  upon  it  (2). 
The  man  who  effected  the  insurance  and  paid  the  premiums  risked 
them,  as  he  was  acting  outside  the  scope  of  his  agency  (a),  nor 
could  he  at  any  time  before  the  risk  ended  have  recovered  the  pre- 
miums back,  as  the  insurer  could  have  answered  that  tlie  persons 
beneficially  interested  were  still  entitled  to  adopt  the  policy  (b). 

Bailor  entitled  although  policy  vrithout  his  authority  and  no  ratifica- 
Hon. — In  America  it  has  been  held  that  where  a  warehouseman 
covered  by  insurance  his  own  goods  and  others  whereof  he  was 
bailee  he  could  not  defeat  an  action  by  the  bailor  for  a  share  of  the 
insurance  on  the  ground  that  he  did  not  authorize  the  policy  or 


(«)  Routh  V.  Thomson,  13  East  274,  289,  per  Bayley,  J. 
(<^  Same  case. 

{u,  Same  case,  p.  284.  per  Ellenborough.  C.  J. 

{x)  This  was  a  case  ot  constructive  agency:  per  Dampier,  J.,  in  Hagedom  v. 
Oliversotij  2  M.  &  S  at  493. 
{y)  Ibid.f  per  Baylev,  J.,  492. 
{«)  Same  case,  per  Ellenborough,  C.  J.,  490. 
Id)  Per  Dampier,  J..  493. 
(6)  Per  Bayley,  J.,  492. 

347 


m 


in 


uSilti 


*441 


THE  LAWS  OF  INSURANCE. 


know  till  after  loss  that  the  policy  existed,  and  failed  to  ratify  the 
warehouseman's  acts  before  loss  paid  (c). 

Bailor  cannot  recover  where  policy  only  covers  assured's  loss. — But  if 
such  an  insurance  does  not  in  the  event  cover  more  than  the  loss 
suflfered  in  respect  of  the  bailee's  own  goods,  the  bailor  will  not  be 
entitled  to  any  part  of  the  proceeds  of  the  policy  (rf). 

Renewed  policy  must  be  conformable  to  the  agreement  to  grant  original 
policy. — If  an  insurance  agent  agrees  to  grant  a  general  policy  and 
to  renew  the  same,  the  renewal  refers  to  the  original  agreement,  and 
not  to  a  poi.'.jy  not  conformable  to  the  agreement,  issued  but  not 
shown  to  the  assured ;  and  the  insurers,  if  they  have  not  power  to 
grant  a  policy  according  to  contract,  will  be  liable  in  damages  for 
holding  out  that  they  could  (e). 

Agents  for  effecting  policy  and  adjusting  loss  not  same. — The  agents 
for  effecting  policies  and  for  adjusting  losses  are  not  necessarily  the 

sexTtie  (/). 
[*  441 J     *  Agents  of  the  assured. — The  agents  of  the  assured  are  of 
two  kinds — 

(1)  Those  commissioned  by  or  who  undertake  to  obtain  insur- 
ance for  him. 

(2)  Those  to  whom  he  makes  reference  for  j)urpose  of  informa- 
tion necessary  for  the  guidance  of  the  insurers  in  deciding  whether 
they  will  or  will  not  issue  a  policy  (o). 

The  first  class  includes  insurance  brokers  a' id  other  persons,  e.  g,, 
solicitors,  and  those  who  act  for  others  in  obtaining  policies  Qi). 

Agent  negligently  insuring  himself  liable. — If  a  party  undertakes  to 
procure  or  renew  a  policy  for  another,  and  proceeds  to  carry  his  un- 
dertakings into  effect  by  getting  a  policy  underwritten,  but  does  it 
BO  negligently  or  unskilfully  that  no  ber*'  'It  can  be  derived  from 
the  intended  insurance,  he  will  be  liable  tc  an  action  at  the  suit  of 
the  person  for  whom  he  undertook  the  duty,  even  though  he  re- 
ceived no  consideration  for  doing  so  (i). 

Delay  till  day  after  agent  received  instructions,  not  negligence. — In 
Dumas  v.  Wyli'.  {j),  an  action  arising  out  of  the  Hatton  Garden 
jewel  robbery,  the  plaintiffs,  owners  of  precious  stones  then  stolen, 
posted  at  the  same  time  as  the  jewels  an  order  to  insurance  brokers 
to  injure  them.  The  broker's  clerk  went  at  half-pest  eleven  on  the 
next  day  to  Lloyd's  to  effect  the  policy,  but,  the  robbery  being  then 

(c)-  Home  Insurance  Co.  v.  Baltimore  Warehome  Co.,  93  U.  S.  (3  Otto)  627. 
Snow  V.  Cair,  CI  Ala.  863,  83  Am.  Rep.  8. 

(of)  Dalgiwlt  v.  Buchanan,  16  0.  S.  C  832,  26  Sc.  Jur.  160. 

(e)  AMuu  Ina.  Co.  v.  MilU,  8  Wila  &  8haw  (Sc  App.)  218,  1  Dow  &  CI.  H. 
L.  842. 

(/)  See  iiokea  v.  Amazon  Fire,  51  Maryland  fil*?. 

\g)  See  per  Lord  Campbell  in  Wheelton  v.  Uardisiv,  8  E.  &.  B.  232,  269,  27 
L.  J.  Q.  B.  341,  81  L.  T.  808,  6  W.  It.  589.  8  Jur  N.  S.  1169. 

(A)  .\8  to  their  powers,  Boe  Xenos  v.  Wickham,  L.  R.  2U.  H.  896, 80  L.J.  Ex. 
813,  l(i  L  T.  N.  S.  800,  16  W.  R.  8P 

(t)   Wilkinson  v.  Coverdnle,  1  Esp.  75. 

(/)  May  22,  1888,  in  Q.  B.  D 

348 


Q. 


AGENTS. 


*443 


known,  the  policy  granted  excepted  any  loss  thereby.  The  jury 
found  that  the  brokers  had  not  been  negligent  in  not  sooner  effect- 
ing the  policy  (/;)• 

Fail:, re  to  effect  a  policy  which  umally  excepted  the  risk. — In 
Canada  agents  were  held  not  liable  for  failing  *to  procure  a  [*  442] 
policy  undertaking  the  risk  of  loss  by  improper  navigation, 
it  being  proved  that  the  usual  form  of  policy  there  granted  excepted 
such  risk,  and  that  no  special  instructions  had  been  given  (/). 

Oum  insurer. — If  a  man  on  being  requested  to  effect  a  policy  says 
he  will  be  is  own  insurer,  this  does  not  make  him  an  insurer  for  the 
owner,  nor  liable  as  an  agent  who  has  undertaken  to  insure,  but 
simply  means  that  he  will  not  insure  his  own  interest  in  the 
goods  (m). 

Agent  cannot  receive  commission  from  insurer  and  assured. — Ad  agent 
to  ftfect  an  insurance  is  not  entitled  to  receive  a  commission  Irom 
the  insurers  and  the  assured,  and  if  he  does  so  the  assured  may  re- 
cover the  amount  from  him  (n),  unless  he  has  acquiesced  in  the  re- 
ceipt by  the  agent  of  such  commission. 

Viscount  belongs  to  principal. — If  discount  be  allowed  for  prompt 
payment,  it  belongs  to  the  principal  and  not  to  the  agent  (o) 

Principal  affected  by  fraud  or  misrepresentation  of  agent. — Misrepre- 
sentation made  by  the  assured's  agent  (whether  due  to  fraud  or 
negligence)  in  procuring  a  policy  is  equally  fatal,  whether  made 
with  the  knowledge  and  consent  of  the  principal  or  not.  since  in 
either  case  the  ground  is  the  same,  that  the  underwriters  are  de- 
ceived (jj). 

Notice  to  assured's  broker. — Notice  to  the  assured's  broker  will  not 
be  notice  to  the  insurer  (g),  but  the  knowledge  of  the  agent  will  bind 
his  principal  (r). 

Statements  of  referees,  <fcc.,  net  analogous  to  those  of  brokers. — There 
is  no  analogy  between  thestat  ment  of  the  life  or  the  referees  in 
the  negotiations  for  a  life  ins^  ranee  and  the  statements  by 
an  insurance  broker  to  ^underwriters  by  which  he  induces  [*  443] 
them  to  subscribe  the  policy  («). 

?%«  "/tfe"  is  the  agent  of  insured,  when  referred  to  by  ^im.— If  refer- 
ence is  made  to  the  person  on  whose  life  a  policy  is  sought  for  an 
answer  to  a  particular  question,  the  assured  is  bound  by  that  answer, 
the  "life"  being  his  agent  for  making  it,  but  he  will  not  be  bound 
by  other  answers  in  respect  whereof  reference  was  not  made  by 


i) 


(A;)  See  alpo  Nicol  v.  Brown,  Diet,  of  Decisions  (Sc.),  vol.  xvii.  p.  7089. 
(/)  Gooderham  v.  ifarleti,  14  U.  C  (Q.  B)  228. 
(m)  Ibid. 

(n)  Copp  V.  Lynch  (1882),  2a  S.  J.  848,  861. 
(o)  Queen  of  Upain  v.  Pan,  89  L  J.  Ch.  78. 

(p)  PitzHerbert  v.  Mather,  1  T.  R.  12  ;  and  see  per  Story,  J  ,  Carpenter  v. 
American  Insurance  Co.,  1  Story  Rep.  67. 
(q)  M^Lachlan  v.  Etna,  4  Allen  (New  Brans.)  178. 


(r)  Lunch  v.  Dunitford,  14  East  404. 
(«)  Wheelton  v.  Hardistji.  8  E.  &  B.  282,  270, 
Q.  B.  241,  5  W.  R.  784,  tf  W.  R.  689,  81  L.  T.  0. 


ler  Campbell,  C.  J.,  27  L.  J. 
'  808,  8  Jur.  N.  S.  1169. 

m 


!■'    *:  I, 


*444 


THE  LAWS  OF  INSURANCE. 


him  (t),  nor  by  the  non-disclosure  of  material  facts  by  "the  life," 
of  which  insurers  and  assured  are  equally  ignorant  (u),  and  as  to 
which  the  assured  has  not  been  asked. 

But  a  general  reference  to  "the  life"  will  make  him  the  assured's 
agent  (x)  in  obtaining  the  policy,  and  any  fraud,  misrepresentation, 
or  concealment  by  him  will  defeat  the  policy  (y).  It  is  usual, 
however,  now  to  insist  on  answers  by  the  life  and  to  have  them 
warranted. 

Medical  man  as  agent. — Reference  to  a  medical  man  falls  under 
the  same  rules,  and  his  representations  as  to  the  health  of  the  life 
laind  the  assured  if  material,  and  if  warranted  even  when  imma- 
terial, and  this  even  though  the  insurer's  medical  officers  may  have 
examined  the  life  or  have  been  informed  by  him  of  the  matter  in 
question  (z). 

Authority  of  broker  employed  to  ^ocure  insurance. — The  authority 
of  a  broker  employed  to  procure  insurance  for  his  principal,  such 
broker  not  being  a  general  agent  to  place  and  manage  insurance  on 
his  principal's  property,  terminates  with  the  procurement 
[*  444]  of  the  policy ;  therefore  where  a  policy  was  subject  to  *can- 
cellation  on  notice,  and  provided  that  any  person,  other 
than  the  assured,  procuring  the  policy  should  be  deemed  an  agent 
of  i\^e  assured,  it  was  held  that  notice  of  cancellation  to  the  brokers 
who  procured  the  policy,  the  assured  being  ignorant  of  such  no- 
tice, was  of  no  effect  (a)  (•}  ("). 

(<)  Wheelton  v  Hardisty,  itbi  supra 

(u)  Ross  V.  Rradshaw,  1  Wm.  Bl.  813,  2  Park  Ins.  934  (8th  ed.)- 

(«)  Maynard  v.  Rhode,  5  Dowl.  &  Ry  266,  1  C  &  P.  300,  and  cases  discussed 
by  Campbell,  C  J.,  in  Wheelton  v.  Hardisty,  8  E.  &  B.  232,  271  sqq. 

iy)  Forbes  v.  Edinburgh  Life  Assurance  Co  ,  10  C.  S.  C.  (1st  series)  861 
(18<2). 

(2)  Connecticut  Mutual  Life  Insurance  Co.  v.  Moore,  0  App.  Cas.  044. 

(«)  Hermann  v.  Niagara  Fire  Co.,  63  Am.  Rep.  197,  55  Sickell,  (N.  Y.)  411. 
Hodge  v.  Security  Im.  Co.,  88  Hun.  (N.  Y)  583.  Von  Wein  v.  Scottish,  <frc., 
Co.,  52  N.  Y.  (Sup.  Ct.  Rep.)  490. 

^  An  agency  to  procure  insurance  is  not,  as  matter  of  law,  presumed  to  con- 
tinue for  the  purpose  of  cancelling  an  insurance  procured,  or  of  receiving  notice 
of  such  cancellation.    Broadwater  vs.  Lion  Fire  Ins.  Co.,  34  Minn.  465.    * 

'  °  Policy  of  insurance  cannot  be  cancelled  without  notice  to  the  assured  or  his 
agent  authorized  to  receive  Buch  notice.  Lancashire  Ins,  Co.  v.  NiU,  114  Pa. 
St.  248. 


850 


ACCIDENT. 


*446 


♦CHAPTER  XXV. 


[*4451 


ACCIDENT. 


II 


AcciderU  inmrance. — Accident  insurance  is  a  branch  of  life  insur- 
ance by  which  persons  are  enabled  to  provide  against  loss  to 
themselves  or  their  families  in  case  they  are  injured  or  disabled  for 
a  time  or  permanently,  or  killed  by  some  one  or  other  cause  oper- 
ating on  them  from  without.  Ordinary  life  insurance  affords  no 
provision  for  the  assured's  family  in  any  cases  short  of  his  death 
or  of  his  reaching  a  given  age.  And  while  friendly  societies  supply 
a  mode  of  insuring  against  disability  through  sickness,  accident  in- 
surance guarantees  a  man  against  the  consequences  of  disability 
through  falls  and  personal  injuries  not  caused  by  disease  or  the 
wilful  act  of  the  person  insured. 

Accidental  policy  not  corUract  of  indemnity . — A  policy  of  insurance 
against  accidents  as  usually  drawn  is  not  a  contract  of  indemnity. 
Alderson,  B.,  said,  "  This  is  not  a  contract  of  indemnity  because, 
a  person  cannot  be  indemnified  for  the  loss  of  life  as  he  can  in 
the  case  of  a  house  or  shop  "  (a). 

Consequently,  if  the  accident  be  caused  by  the  wrongful  ace  of  a 
third  person,  it  would  seem  that  the  insurers  are  not  entitled 
either  to  deduct  from  the  amount  paid  by  them  anything  recov- 
ered by  the  assured  from  the  tortfeasor,  and  that  they  are  not  sub- 
rogated to  his  rights  against  Ihe  tortfeasor  (6). 

The  tortfeasor  cannot  claiiii  to  have  the  amount  *recov-  [*  446] 
ered  from  the  insurers  deducted  from  the  damages  which 
he  has  to  pay  (c). 

Death  from  negligence.  Lord  ChvivpbelVs  Act. — But  if  the  assured  is 
killed  by  an  accident  resulting  from  negligence,  and  an  action  is 
brought  by  his  relatives  under  Lord  Campbeirs  Act  for  the  loss 
they  nave  sustained^  such  loss  is  to  be  calculated  with  reference  to 
any  insurance  on  his  life  (other  than  with  the  Railway  Passengers' 
Assurance  Company),  and  the  amount  of  the  insurance-money 
should  be  deducted  from  the  damages  recovered  (d). 


id)  Theobald  v.  Railway  Pas8enger8\  <kc.,  Co.,  10  Ex.  45,  58,  per  Alderson, 
B.,  28  L.  J.  Ex.  249,  2<  L.  T.  222,  18  Jur.  588,  2  W.  R.  528. 

(6)  27  and  28  Vict,  cap-  cxxv.  r.  85.  And  see  the  judgmeuts  in  Bradbum  v. 
Oreat  Western  Railway^  L.  R  10  Ex.  1. 

(c)  Bradbttrn  v.  Great  Western  Railway^  supra ;  but  see  Liverpool  Plat* 
Glass  Co.  V.  Pslletier,  76  L.  T.  Journ.  804. 

(d)  Hicks  V.  Newport  Railw.  Oo.,  4  B.  &  S.  408  n.  Franklin  v.  S.  E.  R.,  8 
H.  &  N.  211 ;  and  per  Bramwell,  B.,  in  Bra<U>um  v.  G.  W.  R.  ^upro. 

851 


1,1, 1 


447 


THE  LAWS  OF  INSURANCE. 


Asmred'a  righis  against  third  pergon  preserved. — But  by  the  Rail- 
way Passengers'  Assurance  Companies  Act,  1864  (e),  it  is  enacted 
that  no  contract  of  the  company  nor  any  compensation  received  or 
recoverable  by  virtue  of  any  such  contract,  either  under  this  Act  or 
otherwise,  shall  prejudice  or  affect  any  right  .of  action,  claim,  or 
demand  which  any  person  or  his  executors  or  administrators  may 
have  against  any  other  company  or  an^  person,  either  at  Common 
Law  or  by  virtue  of  the  Act  passed  m  the  session  of  the  9th  and 
10th  years  of  her  present  Majesty,  intituled  "  An  Act  for  compen- 
sating the  Families  of  Persons  killed  by  Accident,"  or  of  any  other 
Act  of  Parliament,  for  the  injury,  whether  fatal  or  otherwise,  in  re- 
spect of  which  the  compensation  is  received  or  recoverable. 

Nature  of  policy. — In  some  of  the  earlier  English  (/)  cases  of 
accident  insurance,  the  policies  have  been  drawn,  to  some  extent 
at  least,  as  contracts  of  indemnity.  Thus  in  Theobald  v.  Railway 
Passengers'  Assurance  Company  (g),  where. the  contract  was  to  pay 
£1000  to  jlhe  executors  of  the  assured  on  his  death,  or  a 
[*  447]  proportionate  part  to  himself  *in  case  of  personal  injury, 
and  the  assured  was  injured,  the  Court  of  Exchequer  held 
that  the  insurers  were  bound  to  indemnify  the  assured  for  the  costs 
of  the  medical  attendance  and  expenses  to  which  he  was  put  by 
the  accident,  but  not  for  loss  of  time  or  profits,  thus  following  the 
rule  of  Wright  v.  Pole  (g)  that  profits  can  be  recovered  under  a 
policy  unless  insured  in  terms.  And  Pollock,  C.  B.  (A),  said  "  What 
the  insurance  company  calculate  on  indemnifying  against  is  the  ex- 
pense and  pain  and  loss  immediately  connected  with  the  accident, 
and  not  remote  consequences  that  may  follow  according  to  the  busi- 
ness of  the  passenger." 

In  this  case  there  were  clearly  two  distinct  contracts — 

(1)  To  pay  £1000  to  the  assured 's  executors  if  he  were  killed  by 
accident. 

(2)  To  compensate  him  to  any  amount,  not  exceeding  £1000,  for 
the  expense  and  pain  and  loss  caused  to  him  by  accident.  The  first 
contract  was  to  pay  the  representatives  of  the  insured  a  liquidated 
sum  in  a  certain  event,  the  second  to  compensate  the  insured  him- 
self up  to  £1000  in  a  certain  other  event.  And  the  view  of  Alder- 
son,  B.  (0,  "  that  no  proportion  could  exist  between  injuries  short 
of  death,  and  death,'*^well  expresses  the  essential  difference  of  the 
two  contracts,  and  the  impossibility  of  establishing  a  ratio  between 
the  two  events  provided  against.  Form  and  nature  of  accident  pob'cy, 
— The  private  Act  of  the  insurers  ( j  )  contained  tho  form  of  con- 

(e)  27  &  28  Vict.  cap.  cxxv.  s  85. 

(/)  And  Bee,  in  America,  Hill  v.  Harford  Jna.  Co.,  22  Hun.  (N.  Y.)  187, 
l9Uj  per  Follet,  J.  "  The  central  idea  of  such  a  policy  is  partial  indemnity 
against  accident." 

(a)  10  E.x.  45,  23  L.  J.  Ex.24g,  23  L.  T.  222,  Id  Jur.  688,  2  W.  R.  628.  12  & 
18  Vict.  cap.  xi.  ;  16  &  16  Vict.  cap.  o. 

{a)  Ante,  p.  41. 

(A)  Theobald  v.  Railway  Potaengert,  dtc.  Co.,  10  Ex.  68. 

(0  Ibid,  (^)  16  &  16  Viot.  cap.  o. 

852 


ACXIDENT. 


*449 


,  tract  adopted  in  the  above  case.  But  at  present  the  usual  form  of 
an  accident  rolicy  is  to  pay  a  certain  fixed  sum  per  week  in  case  of 
injury,  arn^  a  certain  other  fixed  sum  in  case  of  death.  Such  poli- 
cies do  not  contemplate  indemnity,  and  avoid  the  necessity  of  going 
into  the  assured's  accounts  or  private  aflfairs. 

*Asmrednotunder  twelve  years. — Insurance  against  accident  [*  448] 
while  traveling  by  railway  may  not  be  affected  with  the 
Railway  Passengers'  Assurance  Company,  by  or  on  behalf  of  any 
one  under  twelve  years  of  age,  and  every  insurance  ticket  obtained 
by  or  on  behalf  of  such  person  shall  be  utterly  void  against  the 
company  (i). 

Insurance  by  friendly  societies. — Insurance  by  friendly  societies 
against  accidents  generally  is  open  to  all  over  sixteen  in  the  ordi- 
nary course  (k),  and  to  still  younger  children  under  certain  special 
conditions  prescribed  by  the  Friendly  Societies  Act,  1875  (/). 

Insurable  interest  requisite. — ^The  rules  ns  to  its  being  necessary  for 
the  person  effecting  a  policy  against  accidents  to  have  an  insurable 
interest  in  the  health  or  life  of  the  assured,  are  the  same  as  for  all 
other  insurances,  under  14  Geo.  III.  c.  48  (m),  which  statutes  pro- 
vides that  it  shall  be  competent  to  show  that  the  policy  was  in  fact 
made  on  account  of  a  person  other  than  the  person  with  whom  it 
is  expressed  to  be  made  (n). 

Accident  time  policies. — Accident  policies,  like  marine  policies,  may 
be  divided  into  time  policies  and  voyage  policies.  The  former,  like 
ordinary  life  policies,  are  made  by  the  year  or  for  life,  and  only 
differ  from  them  in  the  nature  of  the  risk  insured  against.  They 
cover  all  forms  of  accident,  irrespective  of  the  place  where  the  as- 
sured is.  But  it  is  not  unusual  to  limit  the  area  within  which  the 
accident  is  to  happen ;  thus  in  a  recent  case  the  policy  provided 
against  accidents  within  the  United  Kingdom  or  the  continent  of 
Europe,  and  that  it  should  be  avoided  as  soon  as  the  assured  took 
ship  to  go  outside  those  limits.  The  assured  was  killed  in 
Jersey,  *and  the  insurers  disputed  their  liability,  on  the  [*  449] 
ground  (inter  alia)  that  Jersey  was  neither  in  the  United 
Kingdom  nor  on  the  continent  of  Europe  (o). 

Voyage  policies  may  or  may  not  be  limited  in  point  of  time. 
Thus,  a  railway  insurance  against  accident  is  only  available  for  so 
many  days,  and  if  the  journey  is  protracted  beyond  those  days, 
the  policy  ceases  to  be  available.  It  is  always  limited  in  point  of 
space  to  a  prescribed  journey,  and  a  passenger  insured  from  Lon- 
don to  Aberdeen,  with  liberty  to  break  the  journey  given  him  by 
the  railway  company,  would  not  be  insured  against  accidents  hap- 
pening to  him  if  he  cnose  to  go  to  Scarborough  in  the  time  allowed 


i! 


(i)  27  &  28  Vict.  cap.  cxxv.  b.  84. 

(k)  Friendly  Societies  Act,  1875  (88  &  89  Vict,  c  60),  s.  8. 
(I)  88  &  39  Vict.  c.  60,  s.  8  (a), 
(m)  Shilling  v.  Aicidental  Death  Co.,  1  F.  AF.  116,  2H.  &  N.  42,26L.  J.  Ex. 
268,  27  do.  17,  29  L.  T.  98,  5  W.  R.  607. 
(»)  Same  caHc.  »    «       . 

(o)  Stoneham  v.  Ocean,  Ac,  Co.,  8  Times  L.  R.  096. 

28  PORTER  ON  INSURANCE.  853 


m  i 


m 


!.«! 


1 


i 


*460 


THE  LAWS  OF  INSURANCE. 


him  at  York,  for  though  traveling  he  would  be  deviating  from  the 
journey  for  which  he  was  insured.  It  would,  however,  probably 
be  otherwise  if  his  train,  through  some  accident?  or  negligence  of 
the  railway  company,  deviated  on  to  a  branch  line  and  he  was 
there  injured. 

Railway  accident  definition. — Alderson,  B.  (p),  defined  a  railway 
accident  to  be  "an  accident  occuring  in  the  course  of  travelling  by 
a  railway,  and  arising  out  of  the  fact  of  the  journey.  It  does  not 
necessarily  depend  upon  any  accident  to  the  railway  or  machinery 
connected  with  it;"  but  Pollock,  C.  B.  (p.  57),  declined  to  lay  do""n 
any  general  rule.  He,  however,  in  the  case  before  the  Court  laid 
emphasis  on  the  following  facts,  viz.: — (1)  The  plaintiff  was  a  trav- 
eller on  the  railway.  (2)  Though  at  the  time  of  the  accident  hia 
journey  had  in  one  sense  terminated  by  the  carriage  having  stopped, 
he  had  not  "leased  to  be  connected  with  the  carriage,  for  he  was 
still  in  it.  (}\)  The  accident  happened  without  negligence  on  his 
part,  and  wh  ile  he  was  doing  an  act  which  as  a  passenger  he  must 
necessarily  have  done,  for  a  passenger  must  get  into  the  carriage, 
and  get  out  of  it  when  the  journey  iii  at  an  end,  and  cannot 
[*  450]  be  considered  as  disconnected  *with  the  carriage  and  rail- 
way, and  with  the  machinery  of  motion,  until  the  time  he 
has,  as  it  were,  safely  landed  from  the  carriage  and  got  on  the  plat- 
form. The  accident  is  attributable  to  his  being  a  passenger  on  the 
railway,  and  it  arises  out  of  an  act  immediately  connected  with  his 
being  such  passenger." 

Breaking  journey. — Where  the  journey  insured  for  is  not  wholly 
without  break,  and  in  the  same  conveyance,  the  policy  will  it  would 
seem,  cover  passage  from  railway  to  steamer  or  from  one  convey- 
ance to  another  (p).  But  where  the  insurance  is  by  public  or  pri- 
vate conveyance  between  two  points,  and  the  assured  finds  no  con- 
veyance at  a  certain  stage  of  his  journey  and  tries  to  complete  it  on 
foot,  he  will,  it  seems,  not  be  protected  (g). 

Insurance  ticket  for  particular  journey. — insurances  against  railway 
accident  are  usually  effected  by  ticket,  purchased  at  a  station  like 
a  railway  ticket.  The  contract  for  such  insurance  is  effected  by  the 
sale  and  purchase  of  such  ticket  from  the  proper  person  (usually 
the  ticket  officer  of  the  railway  company).  By  the  Railway  Pas- 
sengers' Assurance  Company's  Act,  1864  (r),  s.  6,  it  is  provided  that 
in  all  cases,  tickets  of  insurance  for  particular  journeys  shall  be 
held  to  be  a  valid  execution  by  the  company  of  tne  contract  set  out 
in  tho  schedule  thereto,  and  that  nothing  further  shall  be  required 
to  be  done  by  the  company  in  order  to  legally  bind  the  company 
to  tho  performance  thereof.  This  mode  of  contracting  is  subject 
to  a  disadvantage,  that  the  assured  is  not  identified,  and  may  give 
away  his  ticket  without  much  danger  of  discovery,  although  to  do 

•   (p)  Theobald  v.  Railway  Passengers',  10  Ex.  58,  supra, 

p)  tSeo  Northrup  v.  Raihoay  Passengers'  Assurance  Co.,  48  N.  Y.  616. 
q)  Southard  v.  Railway  Paaaengera'  Aasurame  Co,^  84  Conn.  674. 
r)  27  &  28  Vict.  cap.  cxxv. 

354 


(s) 
(s) 

it) 

(u) 
C.  P^ 
Jur. 


ACCIDENT. 


*452 


80  is  a  misdemeanour  and  avoids  the  contract  made  by  the  ticket  (s). 

Assured  must  be  twelve  years  of  age.— The  contract  in  the  said  sched- 
ule is  to  pay  to  aYiy  person  over  the  age  of  twelve  who  has  duly, 
and  for  the  premium  demanded,  obtained  one  of  the  com- 
pany's ^insurance  tickets,  and  sustains  an  injury  caused  by  [*  451] 
an  accident  to  the  train  or  to  the  carriage  while  travelling 
during  the  particular  journey  for  which  the  ticket  is  issued. 

Amount  of  compensation. — The  compensation  payable  is  as  follows, 
viz : — Where  the  amount  payable  in  case  of  death  is  £1000,  and 
the  assured  is  not  killed,  but  totally  disabled,  he  is  entitled  to  £6 
per  week,  but  if  partially  disabled  to  £1  lOs.  per  week.  If  the 
sum  insured  in  case  of  death  is  £500,  and  the  assured  is  not  killed, 
but  totally  disabled,  he  is  entitled  to  £3  per  week,  but  if  partially 
disabled  to  15s.  per  week.  If  the  sum  insured  in  case  of  death  is 
£200,  and  the  assured  is  not  killed,  but  totally  disabled,  he  is  en- 
titled to  £1  5.«.,  but  if  partially  disabled  to  68.  M.  per  week.  But 
the  Act  provides  different  rates  for  excursion  trains.  If  there  be 
contributory  negligence  in  the  assured  he  cannot  recover,  and  if 
anv  claim  is  fraudulent  the  company  may  recover  back  the  money 
paid  (s). 

This  form  of  contract  by  ticket  issued  on  demand  and  tender  of 
the  proper  premium  is  possible  for  the  insurer,  because  the  risk  to 
be  run  is  calculable  beforehand,  and  the  occupation,  age,  and  habits 
of  the  assured  can  very  seldom  increase  the  probability  of  an  acci- 
dent happening  while  the  assured  is  traveling.  But  where  drunk- 
enness or  an  affliction  increasing  liability  to  accident  is  apparent 
in  the  applicant,  the  railway  company  would  have  a  right  to  refuse 
to  issue  an  insurance  ticket  to  him ;  the  words  of  the  statute  are 
permissive,  not  obligatory  (t) 

Time  policy  against  accident.  Insurer  not  obliged  to  continue. — Time 
policies  against  accident  are  effected  in  the  same  way  as  ordinary 
time  policies,  on  the  basis  of  a  proposal  and  declaration  signed  by 
the  applicant,  containing  such  information  as  the  insurers  deem 
necessary  and  good  faith  requires.  But  there  is  no  obliga- 
tion in  *the  insurer  to  continue  an  accident  policy,  as  there  [*  452] 
is  in  the  case  of  a  life  policy  (w). 

What  must  be  stated  in  proposal  for  accident  policy. — A  man  seeking 
insurance  against  accident  will  be  bound  to  disclose  any  circum- 
stances of  which  he  is  aware  which  he  thinks  would  make  the 
insurers  decline  to  insure  him  or  charge  a  higher  premium,  as  for 
an  increased  form  of  risk. 

The  applicant  is  required  to  declare  that  he  is  in  good  health  at 
the  time  of  application ;  that  he  has  never  had  a  fit  of  any  kind,  or 

(s)  Ibid. 

(s)  27  &  28  Vict.  cap.  cxxv.,  s.  3,  and  sched. 

(0  Ibid,  8.4. 

(m)  27  &  28  Vict.  cap.  cxxv.,  s.  4.  Simpson  v.  Accidental  Death,  20  L.  J.  C. 
C.  P  280,  30  L.  T.  31.  For  form  of  such,  see  2  C.  B.  N.  S.  257,  6  W.  R.  807,  8 
Jur.  N.  S.  1079. 

865     • 


£;    ,1  ■ 


iiiiiii'lii 


!lil» 


<  !! 


*453 


THE  LAWS  OP  INSUBAXCE. 


/ 


paralysis,  or  gout,  or  delirium  tremens;  that  he  has  no  rupture 
physical  defect,  or  deformity ;  that  his  habits  are  at  the  time  of  ap^ 
plication,  and  have  always  been,  sober  and  temperate,  and  that 
there  is  nothing  in  his  occupation,  mode  or  habits  of  life  rendering 
him  peculiarly  liable  to  accident,  and  that  he  knows  of  nothing 
which  he  thinks' would  make  the  insurers  unwilling  to  take  his 
risk ;  and  this  declaration,  with  certain  specific  answers,  is  made 
the  basis  of  the  contract,  and  if  they  are  not  in  all  respects  true, 
the  policy  will  be  voidable,  and  all  premiums  paid  thereunder 
subject  to  forteiture. 

Questions  put  to  proposed  insured. — ^The  particular  questions  put 
are  of  the  following  kind.  (1)  As  to  occupation.  (2)  As  to  pre- 
vious accidents  (if  any)  requiring  medical  or  surgical  attendance, 
with  particulars  (if  any).  (3)  As  to  previous  or  subsisting  assur- 
ances against  accident.  (4)  As  to  refusal  to  accept  proposals  or 
renew  policies.  (5)  As  to  compensation  (if  any)  received  for  per- 
sonal injury. 

Even  if  this  declaration  were  not  made,  nor  these  questions 
asked,  mosl  of  the  information  warranted  therein  would  be  requisite 
under  the  general  principles  of  insurance  law,  especially  that  relat- 
ing to  his  physical  condition.    For  certain  ailments  and 
[*  453]  accidents  diminish  *a  man's  control  over  his  movements, 
and  inciease  his  liabilities  to  accidental  injuries. 

The  risk  also  varies  to  some  extent  according  to  the  trade  or 
calling  of  the  insured,  and  the  insurers  divide  occupations  into 
several  classes,  according  to  the  greater  or  less  liability  to  ac- 
cident found  on  the  average  to  be  attendant  on  such  occupation?. 
Assured  must  truly  state  occupation. — ^The  person  seeking  insurance 
is,  as  has  been  said,  usually  asked  to  state  his  profession  or  oc- 
cupation. If  he  state  it  falsely,  the  policy  will  be  void  by  its 
terms  under  the  rule  in  Anderson  v.  Fitzgerald  (x),  whether  the 
profession  or  occupation  stated  be  more  or  less  hazardous  than  or 
as  hazardous  as  the  real  occupation  of  the  assured  (j/). 

Ironmcmger  described  as  esquire. — Description  by  the  assured  of 
himself  as  an  esquire  is  no  answer  to  a  question  as  to  profession  or 
occupation  (z),  but  a  mere  representation  that  the  assured  is  in 
that  position  of  life  in  which  people  are  usually  styled  esquires  (a). 
Where  a  man  being  engaged  m  trade  as  an  ironmonger  calls  him- 
self an  esquire,  and  says  nothing  about  the  trade,  Uiis  does  not 
amount  to  a  statement  false  in  fact.  At  most  he  has  not  stated  all 
he  might  have  stated.  But  this  only  makes  his  statement  imper- 
fect, not  untrue  (6),  and  the  Court  will  not  deem  such  an  omission 
to  be  a  sujypressio  veri  or  suggestio  falsi. 

(x)  4  H.  L.  C.  484,  17  Jur.  995. 

(w)  See  Perrins  v.  Marine,  tfrc ,  2  E  &  E.  817,  29  L.  J.  Q.  B.  17,  242,  2  L.  T. 
N.  S.  (138,  6  Jur  N.  S  69,  627,  8  W.  R.  41,  568. 
(x)  Per  Hill.  J.,  in  Perrins  v.  Marine,  Jcc^  2  E.  &  E.  817,  at  821. 
la)  Per  Williama,  J.,  in  bame  case,  824  {(Jam  scac.). 
{h)  Per  Wightman,  J.,  in  same  case,  828. 

356 


(c) 
{d) 
J.  Q. 
(«) 
(/ 


1 


ACCIDENT. 


*455 


Cockburn,  C.  J.,  however,  dissented  from  the  decision,  and  con- 
sidered by  calling  himself  esquire  the  ironmonger  virtually  de- . 
scribed  himself  as  of  no  occupation,  and  conveyed  the  impression 
that  he  was  not  in  trade  (c). 

Accident  definiiUm. — Many  of  the  questions  on  accident  policies 
arise  concerning  the  true  meaning  of  the  word  accident, 
and  *it  is  difficult  so  to  define  the  word  as  to  include  the  [*  454] 
innumerable  mishaps  which  happen  in  the  daily  course  of 
human  life ;  and  it  is  often  equally  difficult  to  decide  whether  a 
mishap  comes  within  the  risk  taken,  or  the  exceptions  made,  by 
the  terms  of  a  particular  policy. 

In  North  American  Life  and  Accident  Co.  v.  Burroughs  (c)  acci- 
dent is  defined  as  "  an  event  that  takes  place  without  one's  fore- 
sight or  expectation ;  an  event  which  proceeds  from  an  unknown 
cause,  or  is  an  unusual  effect  of  a  known  cause,  and  therefore  not 
expected ;  chance,  casualty,  contingency." 

Sunstroke. — In  Sinclair's  Ckise  (d)  accident  was  defined  as  includ- 
ing violence,  casualty,  and  vis  major,  but  not  as  including  sun- 
stroke, which  the  Court  classed  with  injuries  from  malaria, 
exposure  to  the  weather,  &c.  It  is  a  known  consequence  of  undue 
exposure  to  the  full  heat  of  the  sun,  and  in  no  way  to  be  classed 
with  the  unforseen,  though  it  operates  ab  extra. 

Accident  and  resulting  injury  distinct. — ^The  injury  and  the  acci- 
dent causing  it  are  distinct,  and  must  not  be  confounded.  A  man 
may  be  accidentally  poisoned,  and  his  death  in  that  case  results 
from  something  unforseen  in  the  course  of  nature,  which  does  not 
operate  externally,  but  the  introduction  of  which  into  the  system 
is  ex  hypothesi  a  pure  accident.  If  such  a  case  happened,  unless 
death  by  poison  were  excepted,  the  insurers  woula  j)robably  be 
liable.  The  accident  would  be  the  fortuitous  reception  of  the 
poison  into  the  body.  The  injury  would  be  the  natural  result  of 
the  poison  when  so  received,  and  would  thus  be  the  effect  of  which 
the  accident  would  be  the  cause. 

Rupture  by  jumping  from  train. — American  decisions  go  some- 
what far  in  restricting  the  definition  of  accident,  following  out  the 
distinction  already  indicated  between  the  accident  and  injury. 
Thus  it  has  been  held  that  rupture  caused  by  jumping 
*from  a  railway  train  before  it  had  stopped  was  not  a  [*  455] 
bodily  injury  effected  through  violent  and  accidental 
means,  on  the  ground  that  the  rupture  was  the  result  and  not  the 
means,  and  that  the  injured  man  meant  to  jump  down  and  did  so, 
and  that  nothing  unforeseen  happened  in  jumpmg  down  (e). 

Injury  jram  putting  arm  out  of  window. — In  Kentucky  (/)  a  man 


(c)  P.  821. 

(c)  8  Am.  Rep.  216.  .    „  „  „  . 

(d)  Sinclair  v.  Maritime  Passengers^  3  E.  &  E.  478,  4  L.  T.  N.  S.  15,  80  L. 
.  Q.  B.  77,  9  W.  R.  342,  7  Jur.  N.  8  867. 

(«)  Southard  v.  Railway  Passengers'  Assurance,  34  Conn.  674. 
(/)  Morel  V.  Mississippi  Valley  Lif^,  4  Bush.  (Ky.)  536. 

367 


:!;/:r:  I'r 


!  i 


iill 


i  !'!mS  i 


'■;'  ;M 


i'iiil 


*466. 


THE  LAWS  OF  INSURANCE. 


who  put  his  arm  out  of  window  and  got  it  injured  against  a  post 
was  held  disqualified  by  negligence  (gr).  The  true  question  would 
be  rather  whether  the  act  was  necessarily  connected  with  the  trav- 
elling, and  negligence  would  have  nothing  to  do  with  the  matter  (A), 
Putting  out  the  arm  to  close  a  door  inadvertently  left  unfastened 
by  the  company,  or  to  catch  something  blown  by  the  draught  out 
of  the  carriage,  would  seem  to  be  acts  arising  out  of  the  journey. 
But  it  might  be  otherwise  where  a  man  put  his  arm  out  merely  to 
feel  the  air  or  the  rain.  Negligence  of  assured. — Such  an  act,  wh ether 
negligent  or  not,  would  not  arise  out  of  any  act  immediately  con- 
nected with  the  journey. 

Fatal  fall  whilst  running  to  caich  train. — ^Where  a  man  ran  to  catch 
a  train,  and  missing  a  step  fell  and  was  killed,  in  America,  it  was 
held  that  actual  travelling  included  the  necessary  getting  into  the 
train  (i). 

Drowning. — Drowning  is  an  accidental  injury  (k)  within  a  policy 
providing  that  no  claim  should  be  made  in  respect  of  any  injury 
unless  the  same  should  be  caused  by  some  outward  and  visible 
means  of  which  satisfactory  proof  could  be  supplied  to  the  direc- 
tors. 
[*  456]  ^Assured  found  in  water. — When  a  man  is  found  dead  in 
the  water,  he  may  be  presumed  to  have  come  to  his  deatli 
by  drowning  and  not  by  fits.  Even  if  he  fell  into  the  water  in  a 
fit  und  got  drowned,  the  insurer  would  be  liable,  as  death  would  be 
caused  by  the  action  of  the  water  and  not  by  the  fit  (I). 

Presumptimi  against  suicide. — If  a  man  might  have  come  to  his 
death  by  accidental  drowning  or  suicide,  the  presumption  will  be 
in  favour  of  accident  rather  than  intention  im). 

Falling  on  railway. — If  a  man  is  seized  with  a  fit  and  falls  on  to 
a  railway  line  on  which  a  train  is  coming,  and  is  so  run  over,  the 
cause  of  death  will  not  be  the  fit,  but  the  being  run  over  (*i). 

Sprain. — The  assured  sprained  the  muscles  of  his  back  in  lifting 
a  heavy  weight,  and  was  held  entitled  to  recover  under  a  pr*)viso 
that  the  injury  must  be  due  to  a  material  or  external  cause  opera- 
ting upon  the  person  of  the  insured  (o). 

Policy  against  death  by  accident  whilst  travelling. — The  assured  left  a 

(g)  Railway  Passengers'  Assurance  Co.'s  Act,  1852  (15  &  16  Vict.  cap.  c,  s. 
133),  provides  that  negligence  may  be  insured  against  by  that  company. 

(A)  See  ChampUn  v.  Railway  Passengers',  0  Lansing  (N.  Y  )  7i,  holding  that 
contributory  negligence  is  no  defence  on  a  policy  of  accident  insurance. 

(i)  Tooley  v.  Railway  Passengers^  Assurance  Co.,  3  Bliss.  (U.  S.  Circ.  Ct)  399. 

(k)  Trew  v.  Railway  Passengers',  6  H.  &  N.  830,  30  L.  J.  Ex.  317,  4  L.  T.  N. 
S.  833,  9  W.  R.  671,  7  Jur.  N.  S.  878.  Reynolds  v.  Accidental,  22  L.  T.  N.  S. 
820,  18  W.  R.  1141. 

It)   Winspear  v.  Accidental,  6  Q.  B.  D.  48,  43  L.  T.  459,  29  W.  R.  116. 

(m)  Mallory  v.  Travellers',  47  N.  Y.  52,  7  Am.  Rep.  410 

In)  iMwrence  v.  Accident  Co.,  7  Q.  B.  D.  216,  50  L.  J.  Q.  B.  522,  29  W.  R. 
802  (1881). 

(o)  Sinclair  v.  Maritime  Passengers'  Insurance  Co.,  4  L.  T.  N.  S.  16,  80  L. 
J.  Q.  B.  77  3  E.  &  E.  478,  7  Jur.  N.  S.  367.  Martin  v.  Travellers'  Co.,  1  F.  & 
p.  606. 

358 


iigv 


.ACCIDENT. 


*  AT^ 


457 


steamer  to  walk  home,  and  while  so  doing  was  injured  by  an  acci- 
dent from  which  he  died.  The  Supremo  Court  of  the  United  States 
held  that  his  own  legs  were  not  a  conveyance,  public  or  privutf, 
within  the  meaning  of  a  policy  against  death  by  accident  whilst 
travelling  by  public  or  private  conveyance  (p). 

Exercise  with  dubs,  rupture  of  blood-vessel. — In  America,  death 
caused  by  rupture  of  a  blood-vessel  while  exercising  with  Indian 
clubs  is  not  accidental  death  if  the  clubs  were  used  in  the  ordinary 
way,  and  no  unforseen  accident,  unusual  circumstance,  or 
involuntary  movement  of  the  body  occurred  which  in  '"^con-  [*  457] 
nection  with  the  movement  of  the  body  brought  about  the 
injury  (r). 

Rupture  of  blood-vessel,  inflammation  of  lungs. — If  death  is  due  to 
inflammation  or  abscesses  on  the  lungs,  consequent  upon  the  rupture 
of  a  blood-vessel  by  over-exertion,  such  rupture  will  be  held  the 
proximate  cause  of  death  and  the  death  accidental,  unless  indepen- 
dent lung  disease  supervened  before  the  rupture,  or  slumbering 
disease  was  brought  into  activity  by  the  rupture  (s). 

Death  must  be  caused  solely  by  accident  to  entitle  assured. — It  is  usu- 
ally stipulated  that  death  must  be  caused  solely  by  accident  to  en- 
title the  representatives  of  the  assured  to  recover  under  the  policy. 
If  death  is  caused  by  peritonitis  due  to  a  violent  and  unintentional 
blow  in  the  stomach,  this  has  been  in  America  held  to  be  death  by 
accident  {t).  So  also  in  the  case  of  hernia  due  to  an  accidental 
fall  (w)  C). 

But  where  erysipelas  sjipervened  upon  a  wound,  the  death  that 
followed  was  considered  to  be  the  result  of  the  disease  rather  tlian 
of  the  wound,  and  it  was  held  that  the  insurers  were  not  liable  (v) 
under  the  special  terms  of  their  policy.  But  gangrene  from  a  cut  has 
lately  been  held  an  accident  within  the  meaning  of  a  policy  against 
accident  (w).  But  death  by  dislodgment  of  a  gaul-stone  consequent 
on  a  fall  has  been  held  not  within  a  policy  against  death  by  acci- 
dent (x). 

Death  under  doctors^  hands. — Death  under  surgeons'  or  physicians' 
hands  is  excepted  in  most  if  not  all  accident  policies.  In  America 
it  has  been  held  that  death  caused  by  taking  accidentally  an  over- 
dose of  opium,  a  proper  dose  having  been  prescribed,  is  within  this 
exception  (y). 

{p)  Ripley  v.  Insurance  Co.,  16  Wall.  (U.  S.)  336. 

(r)  See  McCarthy  v.  Travellers',  8  Bias.  (C.  Ct.  U.  S.)  362,  U.  S.  Dig.  1883, 
p.  496. 

(s)  Same  case. 

h)  N-  Am.  Life,  &c.,  v.  Burroughs,  69  Penn.  43,  8  Am.  Rep.  212. 

(«)  mton  V.  Accidental  Death,  17  C.  B.  N.  S.  122,  34  L.  J.  C  P.  28. 

(«)  Smifh  V.  Accident,  Jkc,  Co,  L.  R.  6  Ex.  802,  39  L.  J.  Ex.  211,  22  L.  T.  N. 
S.  861,  18  W.  R.  1107. 

(w)   Waller  v.  Northern,  ifcc,  Co.,  Times,  Jan.  26,  1887. 

(«)  Cowley  V.  National  Employers'  Co.,  1  'limes  L.  R.  255. 

(y)  See  May  Ins.  (Ist  ed  )  784. 

1  Death  from  bodily  injury  may  mclude  death  from  apoplexy  caused  by  bodily 
injury.    National  Benefit  Aaan.  v.  Grauman,  107  Ind  288. 

369 


!'     f 


i 


m 


iiii  i 
i|ii  ill 


'■mi 


*469 


THE  LAWS  OF  INSURANCE. 


[*  458]  *Uisual  exception  in  accident  policy. — These  policies  usually 
contain  a  clause  to  the  following  effect,  "but  it  does  not  in- 
sureagainstdeathordisability  arising  from  rheumatism, gout,  hernia, 
erysipelas,  or  any  other  disease  or  secondary  cause  arising  within 
the  system,  before,  or  at  the  time  of,  or  following  such  accidental 
injury,  whether  causing  such  death  or  disability  directly  or  jointly 
wilh  such  accidental  injury."  In  the  case  of  Smith  v.  Acddental 
Death  Company,  which  has  just  been  cited,  the  Court  of  Exchequer 
held  (.Kelly,  C.  B.,  dissenting:),  in  construing  such  a  policy,  that 
erysipelas  resulting  from,  and  caused  solely  and  exclusively  by,  an 
accidental  injury  in  the  foot  of  the  insurea  came  expressly  within 
this  exception,  and  that  therefore  the  insurers  were  not  liable  on 
the  policy. 

Hernia — operation. — But  where  hernia  caused  solely  by  eternal 
violence  was  followed  immediately  by  a  surgical  operation  which 
was  intended  to  relieve  the  patient,  but  caused  death,  the  Common 
Pleas  held  that  such  a  case  did  not  come  within  the  exception  (2/), 
and  therefore  the  insurers  were  liable. 

Overdose  of  medicine  by  mistake  not  uoilhin  condition. — Death  from 
an  overdose  of  medicine  by  mistake  is  within  a  policy  against  death 
by  accident  "  conditioned  to  be  void  if  he  die  by  his  own  hand  or 
act  voluntary  or  otherwise,"  the  aim  of  the  condition  being  merely 
to  cover  the  varieties  of  suicidal  self-destruction  (z).  Taking  ah 
overdose  of  laudanum  to  relieve  pain  is  not  within  such  clause  (a). 

Driving  in  vehicle. — Driving  the  assured  out  in  a  vehicle  is  not,  a 
voluntary  exposure  to  an  obvious  risk  (6). 

Own  negligence  covered  by  policy. — The  consequences  of  a  man's 
own  negligence  may  be  insured  against,  and  are  insured  against 

unless  expressly  excepted. 
[*  459]  '-^Standing  on  joist  which  broke. — Where  the  policy  required 
that  the  assured  should  use  due  diligence,  and  he  stood  on 
a  joist  on  the  second  floor  of  a  building  which  was  being  erected 
lor  him,  and  it  broke,  and  he  fell  and  was  killed;  in  America  this 
has  been  held  no  want  of  due  diligence  (c). 

Consequences  of  wilful  exposure  to  unnecessary  danger,  or  peril, 
are  by  some  policies  excepted  from  the  risk. 

Fatal  fall  by  engine-dnver  putting  on  brake. — Where  an  engine- 
driver  slipped,  fell,  and  was  killed  while  going  into  the  tender  to 
put  on  the  brake,  which  is  the  stoker's  business,  he  was  held  not  tq 
nave  been  needlessly  exposing  himself  (d). 

Attempting  to  mjount  carriage  in  motion. — In  America  the  Courts 

(y)  Htton  V.  Accidental  Death  Co.,  17  C.  B.N.  S.  122,  84  L.  J.  C  P.  28,  dis- 
cussed  in  previously  cited  case. 

(z)  Penfold.  v.  Universal  Life  Co.,  85  N.  Y.  817,  89  Am  Rep.  G60.  And  see 
Pollock  V.  U.  S.  Mutual  Co.,  48  Am.  Rep.  204. 

(a)  Mutual  Life  Co.  v.  Laurences  Illinois  (App.)  488. 

(6)  Shilling  v.  Accidental  Death,  1  F.  &  F.  116,  2  H.  &  N.  42,  20  L.  J.  Ex. 
266,  27  do.  16,  29  L.  T.  98,  6  W.  R.  507. 

(c)  Stone  V.  U.  S.  Casualty  Co.,  34  N.  Y  871. 

(d)  Providence  Life  v.  Martin,  32  Maryland  810. 

360 


ACCIDENT. 


*460 


have  gone  BO  far  as  to  hold  that  an  attempt  to  get  into  a  railway 
carriage  whilst  in  slow  motion  is  not  wilful  and  wanton  self-ex- 
posure to  unnecessary  danger  (e).    Assured  took  a  ticket  from  A 
to  B.;  when  the  train  reached  B.  he  got  out,  and  the  signal  was 
given  for  it  to  proceed  to  C,  and  the  train  had  begun  to  move 
Assured  then  attempted  to  get  in  whilst  the  train  was  in  motion 
and  was  killed.    It  was  held  natural  and  prudent  for  a  man  who 
wanted  to  go  in  the  train,  to  get  in  ^"h  Je  it  was  moving,  and  that 
the  insurers  were  therefore  liable  (j).    Jumping  on  omnibus  in  mo- 
tion.—An  assured  who  jumped  on  the  step  of  an  omnibus  in  mo- 
tion, intending  to  travel  by  it,  fell,  and  was  injured,  and  he  was 
held  entitled  to  recover  on  a  policy  against  accident  while  travel- 
ling by  public  or  private  conveyance  (gr). 

A  policy  of  insurance  against  death  or  injury  issued  by  a  railway 
passenger  assurance  company  provided, — 

(1)  No  claim  for  insurance  shall  be  made  when  death  or 
injury  may  have  happened  in  consequence  of  *voluntary  [*  460] 
exposure  to  unnecessary  danger,  hazard,  or  perilous  adven- 
ture (g). 

(2)  Standing,  riding,  or  being  upon  the  platform  of  moving 
railway  coaches,  or  entering,  or  attempting  to  enter,  leaving  or  at- 
tempting to  leave,  any  public  conveyance,  having  steam  as  a  motive 

Eower,  while  the  same  is  in  motion,  are  hazards  not  contemplated 
y  the  contract. 

Passing  from  car  to  car  is  exposure  to  unnecessary  danger. — This  con- 
dition (2)  will  not  include  mere  passing  from  one  part  to  another 
of  a  train  through  which  a  passage  was  possible  and  contemplated, 
but  such  passing  is  exposure  to  unnecessary  danger  within  condi- 
tion (1),  especially  if  it  be  done  at  night  (h). 

Meaning  of  ^^  wholly  disabled." — Where  -insurance  is  effected  against 
an  accident  wholly  disabling  the  assured,  the  necessary  condition 
for  compensation  thereunder  is  proof  that  an  accident  has  so  far 
disabled  the  assured  that  he  can  no  longer  follow  his  occupation, 
business,  and  pursuits  in  the  manner  in  which  he  usually  carried 
it  or  them  on  before  (i).  It  is  not  necessary  to  prove  that  the  as- 
sured cannot  do  any  part  of  his  business  ('). 

The  American  policies,  to  avoid  these  questions,  seem  to  insert 
total  disability  from  all  business.  In  England,  loss  of  both  eyes, 
or  of  both  legs,  or  of  both  arms,  or  of  one  of  each,  are  by  certain 
accident  insurance  companies  treated  as  total  disability. 

What  notice  to  be  given  of  accident. — Notice  of  an  accident  must  be 


i: 


(e)  Schneider  v.  Provident  Life,  24  Wise  28. 

(/)  Tooley  v.  Railway  Passengers',  &c.,  Co.,  8  Bias.  (U.  S.)  399. 

{g)  Champlin  v.  Railway  Passengers',  G  Lansing  (N.  Y.)  71. 

(o)  Burkhard  v.  Travellers'  Co.,  48  Am.  Rep  205. 

(h)  iSawteU'  v.  Railway  Passengers'  Assurance  Co,  15  Blatch.  (C  Ct.  U.  &.) 
216. 

(i)  Hooper  v.  Accidental  Death  Co  ,  3  L  T.  N.  S.  22,  5  h.  &  N.  557,  29  L.  J 
Ex.  484,  7  Jur.  N.  S.  74  ;  eame  case,  per  Wilde,  B.,  at  6  H.  &  N.  646. 

-  See  Saveland  v.  Fiddily  &  Casualty  Co.,  67  Wisconsin  174. 

361 


If.'   ■ 


!t 


111 


lii^iiiilii 


*462 


THE  LAWS  OF  irsURANCE. 


given  as  stipulated  in  the  policy,  usually  to  the  head  office  within 
fifteen  days  of  its  occurrence  {k),  even  when  tiie  assured  is 
[*  461]  killed  instantaneously  (l).  But  unless  this  notice  is  *made 
a  condition  precedent  to  liability  under  the  policy,  the 
Courts  will  not  hold  delay  fatal  to  all  claim,  but  merely  visit  the 
claimant  with  the  costs  (if  any)  occasioned  by  delay  (A). 

Notice  of  instant  death. — And  where  a  policy  against  accident  was 
made  subject  to  a  condition  that,  in  the  event  of  any  accident  to 
the  assured,  he  or  his  representatives  should  give  notice  tiiereof  in 
writing  to  the  company  within  ten  days  after  its  occurrence,  and 
that  unless  the  condition  were  complied  with  no  person  should  be 
entitled  to  claim  under  the  contract,  it  was  held  that  notice  must 
be  given  within  the  prescribed  time  even  of  instantaneous  death, 
and  that  such  notice  might  be  given  by  any  person  appointed  by 
the  assured  for  the  purpose  (0,  or  even  by  any  person  acting  on  be- 
half of  the  persons  interested  in  the  policy  (»i). 

Where  accident  eventually  results  in  death,  and  weekly  payments  made, 
balance  after  deducting  them  is  payable. — Where  an  accident  happens 
disfi,bling  for  some  time,  and  finally  resulting  in  death  within  the 
period  mentioned  in  the  policy,  only  the  balance  remaining  due  on 
the  policy  after  paying  the  weekly  allowances  for  the  period  of  sur- 
vival after  the  accident  will,  it  seems,  be  payable. 

Death  must  ensue  within  specified  time. — When  the  policy  insures 
against  fatal  accidents,  to  entitle  the  representatives  of  the  insured 
to  recover,  death  must  ensue  within  the  time  mentioned  in  tlie 
policy,  usually  three  calendar  months  after  the  accident  (w).  Proof 
must  be  given  of  the  death  (•)  to  satisfy  (i.  e.,  which  ought  to  satisfy) 
the  directors  (o),  and  the  claim  is  usually  made  payable  within  one 
month  after  such  satisfactory  proof  (*).  Evidence  on  which  the 
Court  may  deem  a  tenant  for  life  to  be  dead  is  not  neccd- 
[*  462]  *sarily  satisfactory  proof  of  his  death  to  an  insurance  com- 
pany with  whom  his  life  was  insured  (j)). 

(k)  Gamble  v.  Accident  Ins.  Co.,  4  I.  R.  C.  L.  204. 

{I)  Patton  V.  Emploi/cru'  Liablliti/  Co.,  20  L.  11.  Ir.  93.     Casscl  v.  Lancashire 
and  Yorkshire  Co.,  1  Times  L.  R.  I'JG.  i 

{k)  Stoaeham  v.  Ocean  Co.,  3  Times  L.  R.  (593. 

(l)  Palton  V.  Kmploycrs'  Liability  Assurance  Coi  joration,  supra. 

(m)  IbiS.,  per  Murphy,  J. 

(w)  Lochjer  v   Offlcji,  1  1.  R.  2'!'),  per  Willes,  J.     Perry  v.  Provident  Life,  99 
Mass.  102.     Same  v.  Hamc,  103  Muss.  242. 

(o)  London  Guarantee  \,  Fearnley,  5'App.  Cas.  910,  43  L.  T.  R.  S.  390,  28 
W.  R.  893. 

( «)  Doyle  V.  City  of  Glasgow,  d;c.,   Co.,  53  L.  J.  Ch.  527,  50  L.  T.  323,  32 
W.  It.  47(1. 

"  Denial  of  all  liability  is  n  waiver  of  the  right  to  require  proofs  of  death.  Kan- 
sas Protective  Union  v.  Whitt,  3(1  Kuii.  TfiO. 

*  The  ngent  who  acteJ  in  effecting  insurance,  assured  to  act  as  the  agent  in  re- 


ceiving i)ro()fs  of  death.     The  conipaiiv,  hy  its  acts,  recognized  the  agency.  Held, 
that  agents'  acts  bound  company,     'rravcllers  Ins,   Co.  \,  Edwaida,  122  U<  8. 

302 


467. 


ACCIDENT. 


*463 


Allowance  for  disablement  twenty-six  wee^s.— Allowance  for  disable- 
ment is  usually  limited  to  twenty-six  weeks  for  any  one  accident 
and  in  respect  of  any  one  year's  premium. 

True  construction  of  accident  policy.— Where  an  accident  policy  in- 
sures against  two  classes  of  injuries,  namely,  those  which  occasion 
loss  of  life  within  a  certain  period,  and  those  which  shall  not  be 
fatal,  and  contracts  to  pay  in  the  former  case  an  agreed  lump  sum 
at  death,  and  in  the  latter  case  a  certain  sum  per  week,  the  two  pro- 
visions are  to  be  construed  together,  and  the  evident  intent  is  that 
if  an  injury  happens  within  the  meaning  of  the  policy  it  is  insured 
against  as  coming  within  one  class  or  the  other.  If  it  were  other- 
wise construed,  an  injury  which  should  not  prove  fatal  within  the 
specified  time  would  lurnish  no  ground  of  action  till  it  should  be 
made  to  appear  that  it  would  never  prove  fatal.  This  would  render 
the  insurance  nugatory  in  such  cases  ((/). 

A  policy  runs  for  fifteen  days  after  the  renewal  premiums  become 
due,  and  the  insurers  are  liable  for  that  period.  But,  unlike  life 
policies,  accident  policies  may  be  discontinued,  and,  if  notice  to  do 
BO  be  given  before  the  end  of  the  year,  the  assured  will  not  be  en- 
titled to  tlie  days  of  grace  any  more  than  in  fire  policies  (r). 

Proof  of  accident  to  satisfy  directors. — Where  the  policy  requires 
that  such  proof  of  the  accident  alleged  as  ground  of  claim  shall  be 
given  as  the  director  shall  deem  necessary  to  establish  the  chim, 
it  will  be  construed .  demandiug  what  they  shall  deem  reasonably 
necessary  (s). 

*  Employers^    Linbility   Act. — Employers    of  labour   are  [*''•  463] 
now  by  statute  {t)  made  liable  lor  accidents  of  certain 
kinds  to  their  servants.    In  respect  of  such  liability  they  have  an 
insurable  interest  in  the  life  of  even    employ^  up  to  the  limit  of 
compensation  provided  by  that  Act. 

The  Railway  Passengers'  Assurance  Co.  has  by  a  private  Act  (u) 
taken  special  powers  to  insure  the  liability  of  employers  against 
their  liability  under  the  Employers'  Liability  Act,  and  other  com- 
panies have  been  constituted  for  the  same  purpose  under  the 
Companies  Acts.  < 

Insurers  against  employ(  rs'  liability  require  to  know  the  nature 
of  the  business  in  which  the  liability  is  to  be  incurred,  the  number 
of  })erson8  employed,  the  mode  of  conducting  the  business,  and  the 
amount  of  wages  paid  (on  which  the  premiums  are  calculated). 
In  a  very  recent  case  a  question  has  arisen  as  to  which  a  difference 
of  opinion  exists.    The  case  was  as  follows  : — 

Unusual  operation  by  ivorkmen  performed  by  employe's'  direction. — 
An  unexploded  shell  brought  from  Alexandria,  mistakenly  be- 

{q)  Perry  v.  Pi'ovident  Life,  flO  Mass.  102.     Same  v.  Same,  103  Mass.  243. 

(>•)  See  Salvin  v.  James,  (J  ICast  571. 

(a)  Bnwntitein  v.  Amdental  Jh-ath.  CI  L.  J.  Q.  B.  17.  6  L.  T.  N.  S.  550,  1  H. 
A;  8.  782,  H  .hir.  N.  8.  500.  8f;9  Maiihi/  v.  Gre.sham  Life,  i  L.  T.  N.  S.  347,  0 
W.  R.  547.  31  L.  J.  Ch.  04,  2\,  lieiiv.  43i>,  7  .liir.  N.  S.  3H3. 

(0  KiiiplovcfH'  biubility  Act,  lb80  (43  &  44  Vict.  c.  42). 

(u)  44  &  46  Vict.,  cup.  xli. 

^  363 


I 


m 


>;•' 
% 


'  t 


:  I 


1, 


♦464 


THE  LAWS  OF  INSURANCE. 


lieved  to  be  spent,  was  sent  to  a  gun-making  company  for  the 
purpose  of  cutting  it  with  machinery  which  they  had  made  for 
other  purposes,  but  which  was  the  best  for  the  purpose  desired. 
Before  the  shell  was  cut  it  was  discovered  to  contain  gunpowder. 
A  workman  was  told  to  clear  out  the  powdt  r,  and  while  he  was  po 
doing  the  shell  burst  and  injured  him,  and  he  recovered  compen- 
sation from  his  employers,  who  were  insured  in  respect  of  their 
gunmaking  business  and  their  statutory  liability  to  their  employes. 
The  policy  contained  a  warranty  against  explosives,  and  when  the 
employers  sued  the  insurers  for  the  indemnity  the  insurers 
pleaded  this  breach  of  warranty,  and,  further,  that  the  man  was 
not  when  injured  engaged  in  the  ordinary  work  of  the  employers 
as  described  in  the  policy.  The  employers  obtained  judg- 
[*  464]  ment  at  the  *trial,  but  the  Divisional  Court  was  divided 
on  the  question  whether  the  particular  accident  was 
within  the  policy  (x).  The  Court  of  Appeal,  however,  unani* 
mously  held  that  the  accident  was  covered  by  the  policy  (y). 

Insurers  may  exclude  risk  arising  from  change  of  trade. — Apart  from 
the  circumstances  of  the  particular  case,  it  is  clear  that  the  insurers 
are  not  bound  to  take  the  risks  of  a  change  in  the  trade,  or  t'le 
mode  of  conducting  it,  and  can  by  apt  words  exclude  such  risk. 

Contract  of  indemnity. — It  may  be  observed  that  this  form  of  in- 
insurance,  though  on  human  life,  is  merely  a  contract  of  indemnity 
against  a  legal  liability. 

Employer  mitst  defend  if  required  by  insurer  to  do  so. — The  employer 
will  be  obliged  to  defend  an  action  by  the  workman  if  the  insurer 
requires,  and  if  he  does  so  on  the  request  of  the  insurer,  or  other- 
wise reasonably,  he  will  be  entitled  to  recover  all  the  cost  which 
such  defence  has  putj  him  to,  as  in  the  case  of  re-insurnnce  (2). 

"  Manual  labour,  English  and  Scotch  opinion  divergent. — But  pay- 
ing without  liability  will  not  entitle  the  employer  to  indenmity 
unless  the  insurers  advised  payment.  And  the  liability,  to  be  en- 
forceable iigainst  the  insurers,  must  be  not  only  one  which  falls  on 
the  emjjloyer  within  the  statute  (otherwise  the  employer  would 
have  insurable  interest),  but  also  within  the  policy.  Thus,  in  con- 
sequence of  the  dififerent  interpretation  put  by  English  (a)  and 
Scotch  (6)  Courts  on  the  words  ''manual  labour"  in  the  statute, 
which  applies  to  both  countries  (c),  a  Scotch  omnibua-owner  has 
both  liability  to  and  insurable  interest  in  his  conductors,  whereas 
an  English  owner  has  neither. 


(x)  Henri/  Rifle  Barrel  Co.  v.  Employers'  Liability  Co.,  (Q.  B.  D.  March 
1884.) 
(»/)  The  Times,  18th  July  1884. 
(z)  Siipia„  pp.  '225  et  seq. 

(</)  Mtiiyan  v.  London  (Seneral  Omnibus  Co-,  12  Q  B.  D.  201. 
(/;)   Wii^on  V.  dhhigoii'  Tramway  Co.,  5  C.  S.  C.  (5tb  eories)  «81. 
(f)  43  &  44  Vict,  c"  42,  8.  0(8.) 


864 


QUABANTEE  INSURANCE. 


*466 


♦CHAPTER  XXVI. 


GUARANTEE  INSURANCE. 


[*  465] 


Certain  companies  have  been  established  in  this  country  for  un- 
dertaking the  risks  of  suretyship  for  a  pecuniary  consideration. 
Their  method  of  dealing  is  based  on,  and  closely  resembles,  that  of 
the  ordinary  insurance  companies,  and  their  bonds  of  suretyship 
are  often  termed  policies. 

Writing  requisite. — A  contract  of  guarantee  by  the  Statute  of 
Frauds  must  be  in  writing,  it  being  a  contract  to  answer  for  the 
debt,  default,  or  miscarriage  of  another  person  (a),  and  it  being  also 
a  promise  to  be  answerable  for  a  debt  of,  or  a  default  in  some  duty 
by  that  other  person  towards,  the  promisee  (ft). 

Not  limited  to  fraud. — Where  a  bank  manager  allows  overdrafts 
without  security,  and  loss  is  occasioned  thereby,  this  has  in  Lower 
Canada  been  held  an  irregularity  within  the  meaning  of  a  guaran- 
tee policy  "against  loss  by  the  want  of  integrity,  honesty,  or  fidel- 
ity, or  by  the  negligence,  defaults,  or  irregularities  of  the  manager" 
(c).  In  the  particular  case  the  manager  concealed  the  overdrafts 
by  fictitious  returns,  and  a'^ted  improperly  in  concert  with  the  per- 
sons allowed  to  overdraw  (r/). 

Concealment. — The  ordinary  rule  of  insurance  law,  that 
all  material  ^circumstances  known  to  the  assured  must  bo  [*  466] 
disclosed,  does  not  apply  in  the  case  of  guarantee  policies 
(e).    The  concealment  to  avoid  the  contract  of  guarmtee  must  be 
fraudulent,  for  such  policies  come  within  the  law  of  suretyship, 
and  not  of  insurance. 

Duty  of  assured. — A  contract  to  guarantee  a  man  from  loss  by  a 
certain  employd  does  not  entitle  the  employer  to  run  up  an  embe"- 
zlement  bill  against  the  surety,  and  keep  dishonest  servants  at  an- 
other man's  risk,  when  once  he  knows  or  reasonably  susi)ects  their 
dishonesty  (/).  Nor  may  he  alter  the  terms  of  the  emj)loyment, 
if  the  policy  was  granted  on  the  faith  of  them  (g),  otherwise  he 
may  (h). 

Notice  of  df/aM/«.— Consequently,  it  would  seem  that  on  default, 

(a)  See  per  Blackburn,  J.,  Steele  v.  M^Kinlay,  5  App.  Cas.  758-770,  48  L.  T. 
268.  2!)  W.  R.  17. 

(6)  Eastwood  v.  Kenyan,  11  A.  &  E.  438.     Hargreaves  v.  Parsons^  18  M.  & 

W.  f)70.  ^     ^       ^ 

(c)  Hank  of  Voronto  v.  European  Asmrance  Society,  14  Lr.  Can.  Jur.  186. 
\d)  See  also  liyme  v.  Muzio,  8  f.  II.  Ir.  8m<. 

(e)  iV.  Hrituh  Insurance  v.  Lloyd,  10  Kx  623,  24  L.  J.  Ex,  H, 

(f)  Phillips  V.  Foxall,  L.  R  7  Q  M.  60' 

(g)  L  N.  W  U.  V.  Whinmn,  10  Ex.  77,  28  L.  J.  Ex.  201. 
(X)  Sanderson  v.  Anton,  L.  R.  8  E\.  78. 


4 


*468 


THE   LAWS  OF  INSURANCE. 


l^'. 


■^ 


.■*!V" 


■■:^t: 


«•: 


M' 


W 


and  notice  thereof,  the  insurer  would  at  any  rate  have  the  option 
to  terminate  the  guarantee,  and  a  right  in  equity  to  be  discharged 
it  the  employer  keeps  on  the  employe  after  discovery  of  his  defiults, 
for  one  of  the  surety's  right  on  payment  would  be  to  insist  on  the 
discharge  of  the  employe  (i). 

The  default,  &c  ,  of  which  notice  must  be  given  is,  it  would  seem, 
only  such  default,  &c.,  as  will  found  a  claim  on  the  guarantors  (k). 
But  this  is  a  mere  question  of  the  construction  of  the  particular 
instrument. 

Right  to  dismal  of  employed.— The  guarantor  company  can  require 
dismissal  for  misconduct  if  the  person  guaranteed  has  the  power 
to  do  so,  which  in  guarantees  of  rate  collectors  and  the  like  is  not 
always  possible,  for  a  guarantee  may  be  given  to  a  collector-general, 
or  the  guardians  of  the  poor,  while  the  power  to  dismiss  is 
[*  467]  vested  in  another  person  or  *body  like  the  Treasury  or 
Local  Government  Board  or  Board  of  Trade  (/).  Non- 
exercise  of  a  power  to  suspend  the  employed  vested  in  the  holder 
of  the  policy  will  not  avoid  it  (m). 

Contents  of  guarantee  policies. — Guarantee  policies  contain  pro- 
visions as  follows : — 

1.  That  the  employer  shall  give  notice  of  any  default  or  defalca- 
tion by  the  employed. 

2.  To  forward  any  claim  made  in  respect  of  the  policy  within  a 
limited  time. 

3.  A  proviso  that  the  company  shall  be  entitled  at  the  employer's 
expense  to  call  for  reasonaMe  particulars  and  proofs  of  the  correct- 
ness of  the  claim,  and  verification  thereof  by  statutory  declaration. 

4.  That  only  one  claim  may  be  made  under  a  policj',  .nnd  that 
only  in  respect  of  defaults,  &c ,  committed  within  a  month  of  the 
receipt  of  the  notice  (n). 

5.  That  the  policy  is  granted  only  on  condition  that  the  business 
of  the  employer,  and  the  duties  and  salary  of  the  employe,  shall  re- 
main exactly  ns  stated  in  the  particulars  of  proposal. 

6.  That  unless  notice  of  anything  making  the  actual  facts  to 
differ  from  the  particular  statements  made  shall  be  given  to  the 
insurers,  and  consent  to  the  change  be  given  by  indorsement,  the 
policy  will  be  void. 

7.  That  the  employer  shall,  if  reqired,  aid  (at  the  company's  ex- 
pense if  a  conviction  be  obtained)  in  prosecuting  the  employe  to 

conviction,  and  at  the  company's  expense  give  all  infor- 

[*  468]  mation  and  assistance  *to  enable  the  company  to  sue  for 

and  obtain  the  reimbursement  by  the  employed,  or  his 

(t")  Shepherd  v.  Beecher,  '-i  Peere  Wnis.  28!).  Pkillips  v.  Foxall,  per  Black 
burn,  J.,  L.  R.  7  Q.  B.  665,  OSO.     Burgess  v.  Eve,  13  Eq.  450. 

ik)  Byrne  v.  Miisio  8  L.  R,  Ir.  396,  408. 

(l)  Latoder  v.  Lmcder,  I.  R.  7  C.  L.  57.     Bj/rnr  v.  Muzio,  8  L  R.  Ir.  306. 

(ot)  Byrne  v.  jlfuzw,  8  L.  R.  Ir.  412.  Westport  Union  v.  O'Malley,  8  L.  R.Ir. 
412  noto. 

(n)  Horein  nnch  policies  differ  widely  from  fire  policies,  where  a  dozen  claims 
if  they  arise,  can  be  made. 

860 


GUARANTEE   INSURANCE. 


*4G9 


estate,  of  any  moneys  which  the  company  shall  have  become  liable 
to  pay. 

What  conditions  are  precedent  to  payment — So  far  as  any  of  these 
conditions  are  for  something  to  be  done  preliminary  to  the  comple- 
tion of  the  proof  satisfactory  to  the  directors,  from  which  comple- 
tion of  proof  the  time  of  payment  is  to  run,  they  are  precedent. 
But  those  relating  to  matters  to  be  dene  after  payment  are  not  and 
cannot  be  conditions  precedent.  The  oondition  as  to  prosecution 
being  a  means  of  proving  the  employer's  c'aim  or  loss  is  precedent, 
or  can  be  so  made  (o). 

But  a  condition  that  the  employer  shall  give  assistance  to  enable 
the  company  to  obtain  reimbursement  from  the  employed,  cannot 
be  precedent  to  the  obligation  of  the  company  to  pay,  since  the 
company  cannot  be  entitled  to  reimbursement  until  it  has  either 
paid  or  became  liable  to  pay  (p). 

In  a  guarantee  insurance,  as  the  obligation  of  the  surety  is  con- 
tinuing, the  obligation  of  the  creditor  or  employer  is  also  continu- 
ing, and  any  representation  and  understanding  as  to  the 
trustworthiness  of  the  employed,  on  which  the  contract  was 
originally  founded,  continues  till  its  termination  (q). 

Guarantee  to  guardians  of  poor. — Nor  if  the  guarantee  be  given  to 
the  guardians  of  the  poor  will  the  guarantee  company  be  exempt 
from  liability  on  account  of  the  negligence  of  the  overseers  in  call- 
ing the  collector  to  account  (r). 

^Representation  as  to  mode  of  keeping  accov.nts. — A  statement  [*  469] 
by  the  employer  as  to  the  mode  and  times  of  examining  the 
accounts  of  the  principal  for  person  employed,  amounts  to  a  repre- 
sentation of  the  court*e  of  business  intended  to  be  pursued,  and 
must  be  so  complied  with  («),  and  the  practice  of  examination  must 
continue  as  stated,  or  any  charge  must  be  notified  and  assented  to, 
or  waived  by  the  guarantee  society.  If  a  material  change  is  made 
without  theassent  of  tho  society,  the  policy  will  bo  invalidated  {t). 

The  lial)ility  of  the  guarantors  will  be  for  all  defaults  of  the  em- 
ploye within  the  period  for  which  the  guarantee  is  given,  whether 
found  out  within  the  year  or  after  its  exj)iration,  unless  limited  by 
apt  words  to  defaults  committed  and  discovered  within  the  year  (iO. 

Renewal  of  contract.  Alterations  in  company's  rnla  loill  not  terminate 
contract. — Guarantee  policies  are  usually  nuido  for  a  term  of  one 
or  more  years.  It  is  sometimes  stipulated  that  unless  notice  to  ter- 
minate bo  given,  the  policy  shall  be  treated  as  a  renewal  contract 

(o)  London  Guarantee,  d'c .  v.  Fearnley,  5  App.  Cns.  9ia,  43  T..  T.  300,  28  W. 
R.8'.)3,  ('  L  R.  Ir.  210,  2:32,  ;594. 

(«)  Smith  v!xfrtnA;  of  Scot'and,  1  Dow  272-29',>.     Phillips  v.  Fuxall,  L.  \L  7 

(r)  Guardians  Mannfield  Union  \    Wright,  0  Q.  K  D.  r,Hn. 
(s)  lienham  v.  Uaiitd  Guarankc,  7  F.x.  744,  Ki  .lur  «!M,  21  L.  J.  Ex.  317. 
(t)  Towle  V.  National  Guardian  30  L.  J.  Ch.  .mk),  7  Jur.  N.  S.  1109,  r»  L.  T. 
N.  S.  193,  10  W.  R.  49,  rcverHing  9  W.  H.  (14!)^ 
(tt)  Fanning  v.  London  Guarantee  Co  ,  10  Victorin  L.  K.  h 


mf^ 


■1-h: 


*471 


THE  LAWS  OF  INSURANCE. 


of  like  nature  and  conditions  (v).  The  efifect  of  this  is  merely  to 
continue  the  contract  for  a  second  term.  At  the  end  of  that  term, 
if  no  notice  to  continue  is  given,  or  other  arrangement  made,  the 
policy  drops.  Alterations  in  the  rules  of  the  company,  on  the  faith 
of  which  the  assured  took  the  guarantee  (w),  will  not,  however, 
have  the  efifect  of  determining  su  a  renewed  contract  if  no  notice 
to  terminate  has  been  given  by  ether  party  (x),  and  the  insurers 
will  be  entitled  to  the  renewal  premium. 

Amalgamation. — Amalgamation  with  another  company 
[*  470]  wiJl  not  aflfect  *the  validity  of  the  renewal,  whether  it  be 
within  the  powers  of  the  company  or  not  (y). 

Where  one  of  the  conditions  indorsed  was  that  all  guarantees, 
whatever  might  be  the  original  term,  should  from  the  expiration  of 
such  original  term  be  treated  as  a  renewed  contract  of  the  like  na- 
ture and  conditions,  unless  either  the  member  interested  therein, 
or  the  board  of  directors,  should  give  two  calendar  months'  notice 
of  an  intention  not  to  renew  the  same,  it  was  held  that  the  renewed 
contract  was  not  itself  to  be  deemed  to  contain  this  particular  con- 
dition as  to  renewal,  and  that  therefore  even  in  the  absence  of  no- 
tice the  contract  did  not  extend  beyond  one  renewal.  "A"  renewal 
is  one  renewed  contrac*  (z). 

Retirement  of  partner  from  guaranteed  firm. — Guarantees  on  grops 
annual  'eturns  (a),  floating  risks  or  rent,  are  sometimes  granted. 
When  they  are  made  to  a  partnership  with  a  provision  that  tlie 
guarantee  shall  cease  on  death  or  retirement  from  business  of  any 
member,  the  retirement  of  a  partner  will  avoid  the  guarantee,  an^ 
the  company  cannot,  it  seems,  affirm  it  and  sue  for  the  premium  (a). 

Subrogation  of  company. — A  guarantee  company  issuing  these 
policies  is  as  a  surety  entitled  to  all  the  ways  and  means  of  the  per- 
son guaranteed  against  the  principal  debtor  (6). 

Liquidator  and  receiver. — Liquidator  under  the  Companies  Acts 
may  give,  in  lieu  of  the  two  sureties  usually  reqiuired.  the  guaran- 
tee of  any  society  established  by  charter  or  Act  of  Parliament  (c). 

Receivers  in  the  Court  of  Chancery  have  been,  after 
[*  471]  *8ome  diflference  of  opinion  and  practice,  allowed  to  do  the 
same  {d). 

No  case  on  the  point  seems  to  have  occured  in  the  Queen's  Bench 
Division,  and  the  aew  Rules  (e)  prescribe  that  unless  otherwise 


(v)  Solvency  Mutual  (Guarantee  Co.  v  lYoane,  7  H.  &  N.  •">,  31  L  J.  Ex.  139. 
Iw)  Solvency  JUutual  Guarantee  v.  Freeman  7  H.  &  ?^   17. 
(a;)  Solvency  Mutual  Guarantee  v.  rork,  3  H  &.  N.  -588,  27  L.  J.  Ex.  487. 
(y)  King  v.  Accumulative  Life,  3  C.  B.  N.  S.  151,  6  W.  R.  12,  30  L.  T.  110,  27 
L.  J.  C.  P.  57,  3  Jur.  N.  S    1264. 


0) 

(6) 
(c) 
id) 
ners  v 


Solvency  Mutual,  dkc,  v.  Froane,Sl  L.  J  N  S.  Ex.  198,  7  H.  &  N.  5. 
Solvency  Mutual  Guarantee  v.  Freeman,  7  H.  &  N.  17. 
Mercantilt  Law  Amendment  Act. 
Companiea  Act,  1862,  General  Rule  10. 

Colmore  v.  North.  27  L.  T.  N.  8.  *05,  48  L.  J.  Ch.  4,  21  W.  R.  48.    Man- 
Furze,  11  Beav,  SO. 


(e)  Ord.  1.  r.  16. 
368 


GUARANTEE   INSUItANCE. 


*471 


ordered  the  person  to  be  appointed  receiver  shall  first  give  security 
to  be  allowea  by  thelCourt  or  a  judge;  such  security  to  be  by  recog- 
nisance in  the  Form  No.  21  in  Appendix  L.  unless  otherwise  or- 
dered. 

Administrator  pendente  lite. — But  there  is  little  reason  to  doubt 
that  the  Chancery  practice  would  be  followed  in  the  whole  of  the 
High  Court,  and  in  the  Probate  Division  an  administrator  pendente 
lite  who  is  a  mere  receiver  has  been  allowed  to  offer  this  form  of 
security,  on  the  Court  being  satisfied  that  the  bond  proposed  was 
in  accordance  with  the  rules  prescribed  by  the  constitution  of  the 
society.  The  security  is  certainly  better  than  that  of  a  private 
person  (/). 

(/)  Carpenter  v.  Queen's  Proctor,  7  P.  D  235,  51  L.  J.  Prob.  91,  46  L.  T. 
821,  31  W.  R.  108. 


I 

T 


n 

f    if 


24  I'OUTKK  <►!«  T\8UKANCK. 


3(>9 


,i    si 


*473 


THE   LAWS  OF  INSURANCE. 


[*  472] 


*CHAPTER  XXVII. 


BANKRUPTCY. 


Must  vu>tice  of  aaeignment  have  been  given  to  defeat  claim  of  trustees  in 
bankruptcy? — Prior  to  the  Bankruptcy  Act,  1869,  where  the  assured 
affected  to  assign  a  policy  of  life  assurance  for  valuable  considera- 
tion, the  assignee  for  value  would  not  have  a  good  title  as  against 
the  assignee  in  bankruptcy,  unless  he  had  given  notice  of  the  as- 
signment to  the  insurance  office,  as  the  policy  would  in  the  absence 
of  such  notice  be  deemed  to  be  in  the  order  and  disposition  of  the 
bankrupt,  and  pass  to  the  assignee  in  bankruptcy  accordingly,  un- 
der the  order  and  disposition  clause  of  the  statute  (a),  nor  would 
the  giving  of  notice  be  rendered  unnecessary  by  the  practice  of  the 
particular  office  not  to  take  notice  of  assignments  (6),  and  the  no- 
tice must  have  been  actual  and  not  merely  constructive  (c). 

Now,  however,  it  is  not  necessarjr  for  the  assignee  for  value  of  a 
policy  of  life  assurance  to  give  notice  to  the  office  in  order  to  pre- 
vent the  policy  passing  to  the  trustee  in  bankruptcy;  because  poli- 
cies of  assurance,  being  choses  m  action,  are  excepted  from  the 
operation  of  the  order  and  disposition  clause  of  the  Bankruptcy 
Act,  1869  (d),  and  also  from  the  like  section  of  the  Bankruptcy 
Act,  1883  (e). 

Can  claims  arising  out  of  insurance  be  proved  in  bankruptcy  f 
[*  473]  — Under  the  older  Bankrupt  Laws,  demands  payable  *on  a 
contingency  could  not  be  proved  against  the  estate  of  the 
bankrupt,  and  this  risk  was  held  to  apply  to  money  assured  by  a 
policy  of  insurance ;  but  a  provision  was  inserted  in  the  Bank- 
ruptcy Act,  1849,  s.  174,  enabling  the  assured  in  a  policy  of  insur- 
ance to  make  a  claim,  and  after  the  loss  or  contingency  happened 
to  prove  and  receive  dividends,  in  like  manner  as  if  it  had  hap- 

Eend  before  the  bankruptcy.    Proof  in  a  similar  case  would  now 
ave  to  be  made  under  s.  31  of  the  Bankruptcy  Act,  1869,  the  cor- 
responding section  in  the  Bankruptcy  Act,  1883,  being  s.  37. 

Proof  for  future  premmms. — Proof  for  unpaid  premiums  must  be 
made  under  s.  81  of  the  Bankruptcy  Act,  1869,  or  under  s.  37  of 
the  Bankruptcy  Act,  1883. 


is 


la)  Williams  v.  Thorp,  2  Sim.  268. 
(6)  Went  V.  RHd,  2  Ha.  249. 
Ic)  Thompson  v.  Spim,  13  Sim.  469. 
(a)  Bankruptcy  Act,  1869.  s.  16,  sub-s.  6.     Ex  parte  Ibbetaon,  8  Ch.  D.  619 
89  L.  T.  1,  26  W.  R.  848.    Ex  parte  Barry,  L.  R.  17  Eq.  118,  48  L.  J.  Bkcy.  18. 
(e)  46  &  47  Vict,  c  52,  8.  44,  sub-s.  8. 

370 


BANKRUPTCY. 


*Ar4 


Proof  by  trustees.— Where  policies  were  settled,  proof  by  the 
trustees,  after  payment  of  the  moneys  assured,  was  allowed  againfit 
the  settlor's  estate,  for  the  premiums  which  the  trustees  lia<l  paid 
out  of  a  fund  provided  for  that  purpose  in  case  of  the  settlor's  de- 
fault to  pay  them  (/). 

i^roof  against  company  being  wound  up. — A  holder  of  a  policy  of 
insurance  in  an  insurance  company  which  was  being  wound  up 
was  held  entitled  to  prove  for  the  sum  which  would  be  required  to 
be  paid  to  a  similar  solvent  insurance  company  in  order  to  givethe 
policy-holder  a  policy  for  the  same  amount  and  under  the  same 
conditions  ig). 

Rights  of  creditor  of  assured  having  a  security  on  the  policy  in  case  of 
bankruptcy. — A  secured  creditor  may  assess  the  value  of  his  securi- 
ties, and  vote  and  prove  in  respect  of  the  balance,  and  is  bound  to 
pay  over  to  the  trustee  the  amount  which  the  security  shall  pro- 
duce beyond  the  amount  of  such  assessed  value,  and  the  trustee 
may  at  any  time  before  realization  of  the  security  bv  the 
creditor,  *redeem  the  security  upon  payment  of  the  [*  474J 
assessed  value.  If  the  security  prove  to  be  more  valuable 
than  the  amount  at  which  it  has  been  assej^sed,  the  trustee  may 
either  redeem  it  upon  payment  of  such  assessed  value,  or  he 
may  claim  whatever  surplus  the  security  may  produce  over  such 
assessed  value. 

The  proof  of  tho  creditor,  however,  cannot  be  increased  in  the  evont 
of  the  security  realizing  a  less  sum  than  the  value  at  which  the 
creditor  assessed  it  (A). 

It  would  seem,  therefore,  that  if  a  creditor  has  taken  as  security 
a  policy  of  assurance,  his  most  prudent  course  will  be  to  realise  it, 
otherwise  should  it  increase  in  value  during  the  bankruptcy,  the 
gain  will  be  the  trustee's,  while  if  it  becomes  less  valuable  the  lose 
will  be  his  own.  In  Ex  parte  King  (t),  a  creditor  for  £1209  held  as 
security  a  policy  on  the  life  of  the  debtor  for  £1200.  He  tendered 
a  proof  for  his  debt,  Ftating  tjiat  he  held  the  policv  as  security, 
wh  ich  he  assessed  at  £200,  its  then  surrender  value.  The  trustee  aa» 
mitted  the  proof  for  the  balance  of  the  debt,  being  satisfied  witb 
the  value  put  upon  the  security.  Shortly  afterwards,  and  before 
the  close  of  the  liquidation,  the  debtor  died,  and  it  was  held  by 
Bacon,  C.  J.,  that  the  trustee  was  entitled  to  the  whole  sum  received' 
on  the  policy  beyond  the  £200  at  which  its  value  had  been 
assessed. 

Mortgage  of  policy  receiving  composiiion. — Where  a  creditor  is  se- 
cured by  a  policy  and  values  it,  and  receives  a  composition  for  the 
rest  of  his  debt  m  excess  of  his  valuation,  he  has  no  claim  on  the 


(/)  Re  Miller,  Ex  parte  Wordlet/,  37  L.  T.  N.  S.  08,  6  Ch.  D.  700,  25  W, 
R.  881, 

\q)  Re  Albert  Life  Assurance  Co  ,  L.  R.  9  Eq.  707. 

(A)  Bankruptcy  Act,  1869  (32  &  3;J  Vict,  c  71),  s.  40  0.  R.  90,  100,  101, 
186  27*2. 

(0  Ex  parte  King,  Re  Palethorpe,  L.  R.  20  Eq.  278,  44  I..  J.  Bkcy.  92. 

871 


ii! 


*-^6 


THE  LAWS  OF  INSURANCE. 


policy  beyond  tho  amount  of  Iiis  valuation  and  interest  thereon, 
together  with  the  premiums  he  has  paid  on  the  policy  (Jc). 
[f  475]  In  this  case  a  del)tor  by  a  composition  *deed  dated  4th 
November  1864,  registered  under  the  Bankruptcy  Act,  1861, 
in  consideration  of  a  covenant  on  the  part  of  himself  and  a  surety 
to  pay  a  compositijn  of  ten  shillings  in  the  pound,  obtained  a  re- 
lease from  his  scheduled  debts  by  a  statutory  majority  of  his  cred- 
itors. The  deed  contained  a  proviso  tiiat  every  secured  creditor 
^ould  have  the  full  benefit  and  advantage  of  his  security,  and 
should  be  entitled  to  the  composition  after  allowing  for  the  value 
of  such  security.  Amongst  the  secured  creditors  was  one  for  £229 
8«.  5rf.,  whose  security  was  a  policy  of  assurance  on  the  life  of  the 
debtor.  The  creditor  valued  the  policy  at  £16,  and  for  the  diffV-r- 
^ce,  namely,  £213  Sa.  5d.,  he  received  the  composition  of  ten  shill- 
ings in  the  pound.  The  policy  having  fallen  in  after  some  pre- 
miums had  been  paid  by  the  creditor,  it  was  held  that  upon  the 
construction  of  the  deed  the  creditor  upon  the  execution  of  the 
<}eed  remained  a  creditor  for  £16  only,  and  that  (the  composition 
havinj?  been  duly  paid)  the  proceeds  of  the  policy  after  payment 
of  £16  and  interest  belonged  to  the  debtor's  estate,  subject  to  re- 
payment with  interest  to  the  creditor  of  premiums  which  he  had 
paid. 

To  whom  policy-money  belongs  when  premiums  paid  by  bankrupt. — 
Where  ai  man  after  his  bankruptcy  pays  the  premiums  on  policies 
on'  his  own  life,  effected  and  mortgaged  by  him  before  his  bank- 
ruptcy, and  his  assignees  in  bankruptcy  disclaimed  any  interest, 
a^d  refused  to  pay  the  premiums,  on  his  death  his  legal  personal 
representatives,  and  not  the  assignees,  are  entitled  to  any  surplus 
after  the  mortgagees  have  been  paid  (l).  In  this  case  tho  bankrupt 
bad  obtained  his  discharge  on  covenanting  to  pay  so  much  a  year 
to  liquidate  his  debts,  which  covenant  he  had  performed. 
i  Though  the  case  was  argued  on  (24  &  25  Vict.  c.  134,  s.  154) 
t^  repealed  Act,  the  principle  seen^  clear  independently  of  that 

Act. 
\l^  476]     ^Disclaimer  by  bankruptcy  trustees.    Payment  of  premiums  by 
i.  bankrupt  mortgagor. — If  the  trustees  in  bankruptcy  disclaim, 

th^y  cannot  subsequently  ex  post  facto  claim  again  where  they  see 
d  chance  of  profit  (m).  Where  the  mortgagor  of  a  policy  of  insur- 
ance became  bankrupt,  but,  notwithstanding  his  bankruptcy,  con- 
tinued to  pay  the  premiums  on  the  policy,  it  was  held  that  the 
premiums  so  paid  were  in  tho  nature  of  salvage  moneys,  and  mu?t 
be"  repaid  to  the  legal  personal  representative  of  tho  mortgagor,  he 
having  died  (n). 


D.   171,   per  Bacon,  V.  C.  (1880),  49  L.  J.  Ch. 
The  composition  was  under  tho  old  Baiikniptcy 


,^(fo)  Bolton  V.  Ferro,  U'Ch. 
569,  42  L.  T.  529,  28  W.  R.  578. 
Act,  1861. 

,♦(/)  ^e  Uarmonth,  14  W.  R.  6  8  (1806). 
(m)  Ex  iMirto  Ibhefnon,  8  Ch   D.  519,  39  L.  T.  1,  20  W.  R.  843. 
(n)  Shearman  v.  Br'itish  Empire  Mutual,  14  Eq.  4,  20  W.  R.  620,  26  L.  T. 

372 


BANKRUPTCY. 


*47Y 


Surety's  podtion  on  bankruptcy  of  policy  holder. — If  a  man  becomes 
surety  to  keep  up  a  policy  jind  the  principal  becomes  bankrupt, 
the  surety  caunot  subsequently  recover  from  the  principal  any  pre- 
miums paid  thereafter;  for  although  such  liability  of  the  surety 
was  contingent,  it  might  have  been  j>roved  in  the  bankruptcy  (o). 

Avoidance  of  voluntary  settlement  of  policy — Any  settlement  ctf 
property  made  by  a  trader — not  being  a  settlement  made  before 
and  in  consideration  of  marriage,  or  made  in  favour  of  a  purchaser 
or  incumbrancer  in  good  faith  and  for  valuable  consideration,  or  a 
settlement  made  on  or  for  the  wife  or  children  of  the  settlor  of 

Eroperty  which  has  accrued  to  the  settlor  after  marriage  in  right  of 
is  wife — shall,  if  the  settlor  becomes  bankrupt  within  two  yeaiip 
after  the  date  of  the  settlenient,  be  void  as  against  the  trustees  in 
the  bankruptcy ;  and  shall  if  the  settlor  becomes  bankrupt  at  any 
subsequent  time  within  ten  years  after  the  date  of  the  settlement, 
be  void  as  against  such  trustee  unless  the  parties  claiming  under 
the  settlement  can  prove  that  the  settlor  was  at  the  time  of  making 
tiie  settlement  able  to  pay  all  his  debts  without  the  aid  of  , 

the  *property  comprising  in  such  settlement  ( p).     The  [*  477j 
word  "  property "  includes  a  policy  of  life  assurance,  the 
same  being  a  chose  in  action  (r/).  • 

The  new  Bankruptcy  Act,  1883,  contains  a  similar  provision  to 
the  foregoing,  but  ot  a  more  extended  operation,  inasmuch  as  it  apr 
plies  to  all  settlements  by  whomsoever  made,  and  not  merely  to 
those  of  a  trader  (r) 

570,  doubted  in  Leslie  v.  French,  23  Ch  D.  552.  See  Xorris  v.  Caledonian.  8 
Eq.  127,  20  L.  T.  N.  S.  930,  17  W.  R.  054,  and  Foster  v.  Roberts,  'J  W.  R.  605, 
7  Jur.  N.  S.  400.  ,      ,  . 

(o)  Saunders  v.  Best,  13  W.  R.  ICO,  17  C  B.  N.  S.  731.  Bankruptcy  Act. 
1869  s.  31 :  Bankruptcy  Act,  1883,  s.  37.  « 


p)  Bankruptcy  Act,  1869,  s.  91. 
q)  Ibid,,  s-  4. 
(r)  46  &  47  Vict  c«52,  s.  47. 


i 


ft-j  f)', 


■\rU 


i<  I 


It    I 


m 


..i 


37o 


ill 

m 


IMAGE  EVALUATION 
TEST  TARGET  (MT-3) 


1.0 


1.1 


UilU    12.5 

■50  *^^     MHH 

■ii     Itt       12.2 


m 


1.25  1  1.4    IIIJ4 

^ ^//  — 

► 

Photographic 

Sciences 

Corporation 


^-  %K^^ 


^ 


^. 


33  WIST  MAIN  STRUT 

WnSTIR.N.Y.  MSIO 

(7U)I73-4S03 


'<* 


i^ 


<^ 


4^ 


^ 


479 


THE  LAWS  OF  INSURANCE. 


t*478] 


♦CHAPTER  XXVIII. 


THELLUSSON  AND  SUCCESSION  DUTY  ACTS. 


Direction  to  pa?  premiuma  noiaccumulatUm  within  Act. — A  direction 
or  discretion  i^*  •.  will  or  deed  to  pay  out  of  the  testator's  or  settlor's 
property  the  i  re  ninms  on  a  poney  of  insurance  made  or  to  be 
made  upon  the  i'le  of  another  is  valid  for  the  whole  life  insured, 
and  is  not  an  accumulation  within  the  meaning  of  the  Thellusson 
Act  (39  &  40  Gt-< .  III.  c.  98)  (a). 

That  Act  only  aims  at  dispositions  for  the  accumulation  of  rents 
and  profits  as  such,  and  not  at  dit^positions  having  reference  to  bar- 
gains and  contracts  entered  into  for  other  purposes  than  the  mere 
purpose  of  accumulation.  ^ 

The  benefit,  if  any,  arising  to  an  o«itate  from  a  policy  on  which 
premiums  have  been  paid  for  over  tweiitv-one  years  arises  not  from 
■ccumulaiion,  but  from  application  and  expenditure  of  income  in 
obtaining  a  contract  (6). 

To  insist  that  the  policy  must  be  dropped  at  the  twenty-first 
year  would  be  to  say  that  what  is  construed  for  that  purpose  as  an 
accumulation  shall  operate  as  a  vain  casting  away  of  money.  For 
a  policy  is  evidence  of  a  contract  enforceable  bv  forfeiture  of  pre- 
vious payments,  and  the  premiums  could  not  be  got  back  at  the 

end  of  the  twenty  years. 
[*479]  *A  testatrix  empowered  her  trustees,  if  they  should 
Bee  cause,  to  make  insurances  on  the  life  of  a  nephew  in 
such  a  way  as  to  enable  them  to  receive  a  sum  or  sums  at  his  denth, 
to  be  then  applied  for  the  purpose  of  the  trust.  *She  died  in  1841. 
In  1845  the^  trustees  insured  the  life  of  the  nephew  largely,  and 
paid  premiums  out  of  the  income  of  the  estate  till  1878,  when  lie 
died.  The  next-of-kin  claimed  repayment  of  these  premiums  so 
far  as  paid  after  twenty-one  years  from  testatrix's  death  as  accumu- 
lations of  income  forbidden  by  the  Thellusson  Act,  but  the 
claim  was  refused  (c). 

Relation,  o^  predeceasor  and  succeaaor  does  not  arise  rm  policy. — By 
the  Succession  Duty  Act  (d),  s.  17,  "No  policy  of  insurance  on  the 
life  of  any  person  shall  create  the  relation  of  nredeeessor  and  suc- 
cessor between  the  insurers  and  the  insured,  or  between  the  in- 

(a)  Bassil  v.  Liater,  0  Hare  177.  Ilalford  v.  CUm,  W.  N.  7th  May  1888,  p. 
8U     Cathcart'a  Trmtees,  IOCS.  C.  (4th  sories)  1206. 

(ft)  CathcarVa  v.  Ueneage'g  Tnisteea^  supra.  But  see  Jartnan  on  Wills,  vol.  1 
(4th  od.),  810. 

(r)  CathcarVa  Truateea  v.  Heneage'a  Truateea,  10  G.  S.  C  (4th  nories)  1206. 

(rf)  16  &  17  Vict.  c.  61,  8.  17. 

874 


THELLUSSON  AND  SUCCESSION  DUTY  ACTS. 


480 


surers  and  the  assignee  of  the  assured."  Upon  this  section  Sir 
George  Jessel  said  (e):  "No  doubt  there  may  be  a  gratuitous 
policy  of  insurance.  But  the  words  in  s.  17  mean  a  policy  eflfeoied 
in  the  ordinary  way  in  consideration  of  a  premium  or  premiums. 
If  soj  that  is  a  contract  for  money,  a  purchase  of  a  reversionary 
sum  m  consideration  of  a  present  payment  of  money,  or,  as  is  gen- 
erally the  case,  on  the  payment  of  an  annuity  during  the  lite  of 
the  person  insuring,  it  is  clearly  a  contract  which  could  not  be 
fairly  described,  as  I  read  it,  as  a  disposition  of  property  at  all,  be- 
cause a  mere  covenant  to  pay  money  is  not  a  disposition  of  property 
in  the  ordinary  sense.  The  insurance  company  does  not  die,  and 
therefore  a  covenant  to  pay  money  on  the  death  of  some  other 
person  is  a  mere  covenant  to  pay  money.  It  is  no  disposition  of 
the  property  of  the  insurance  company  or  of  any  one  else." 

The  reason  for  the  exception  suggested  by  Sir  George* 
I'Jessel  is  that  it  was  inserted  ex  abundarUe  eatUekt  to  ^uiet  [*  480] 
the  fears  of  persons  interested  in  insurance  companies  ex 
cauteld  (/).  The  clause  extends  to  all  policies,  whether  for  the 
lives  of  the  assured  or  not,  including  policies  taken  out  by  pur- 
chasers in  reversion,  but  not  policies  so  far  as  they  were  dealt  with 
as  property  (g). 

No  duty  on  aaai^ed  policy. — No  succession  duty  is  due  on  policies 
of  insurance  assigned  inter  vivos,  even  where  the  assignment  is 
made  to  a  son  as  a  means  of  liquidating  a'  large  amount  of  debt 
undertaken  by  him  for  his  father  (h). 


hiii 


\ll 


(e)  Frver  v.  Morland,  8  Ch.  D.  685. 
(/)  ^ryer  v.  Morland,  «  Ch.  D.  676,  686 

Ch.  D.  676. 


a)  128  Hansard,  401,  1898. 

A)  Lord  Advocate  v.  Earl  of  Fife,  21  Sc.  L. 


R.  151.    Fryer  v.  Morland,  8 


876 


ACC 


A< 
A 


•  m 


INDEX. 

[The  paging  refers  to  the  [*]  pagew.] 


ABANDONMENT- 
Tho  doctrine  of,  4-5 

ACCIDENT— 

Policy  against,  nature  of,  19,  445 

Policy  against,  within  statute  as  to  interest,  70,  448 

Policy  against,  whether  contract  of  indemnity,  445 

Whether  amount  of  insurance  deducted  from  damages,  446 

Age  for  insuring  against,  448-450 

Friendly  society,  insuring  against,  448 

Definition  of  railway,  449 

Whilst  breaking  journey,  450 

Insurance  against,  by  railway  ticket,  450 

By  railway,  amount '^f  compensation,  451 

Contributory  negligence,  effect  of,  on  claim  for,  451 

Insurance  against,  need  not  be  Continued,  451 

Definition  of,  453-454 

Sunstroke,  whether  it  is,  454 

Rupture  by  jumping  from  train,  whetlier  it  is,  454 

Putting  arm  out  of  window,  injury  from,  455 

Fall  when  catching  train,  455 

Drowning,  whether  an,  453 

Presumption  against  suicide  and  in  favor  of,  45t] 

Sprain  trom  lifting  weight,  whether  it  is  456 

Rupture  from  using  clubs,  whether  it  is,  45tf 

Inflammation  from  ruptured  blood-vessel,  457 

Peritonitis  from  blow  457 

Erysipelas  from  wound,  457-458 

Doctor's  hands,  death  under,  457 

Overdose,  deatn  from,  whether,  457 

Usual  exception  from  policy  against,  457 

Death  must  be  solely  caused  by,  to  be  within  policy,  457 

Falling  from  joist,  whether  an,  458 

Whilst  mounting  carriage  in  motion,  450 

"Wholly  disabled"  by,  meaning  of,  460 

Notice  to  office  of,  400 

Allowance  for  disablement  by,  461 

Construction  of  policy  against,  401 

Proof  of  what  requisite,  4til-462  • 

ACTUS  DEI— 

Excepted  from  risk  taken,  178 

ADMINISTRATION- 

Has  insurable  interest,  07 
Not  bound  to  insure,  07 

(377) 


482 


INDEX. 


[The  paging  refers  to  the  [*]  pages.] 

AGE— 

Proof  of,  139,  204 
Misstatement  of,  204 

AGENT- 

Relainer  of  premiums  by,  not  failure  of  company  to  repay,  26 

Authority  ot,  must  be  followed,  78 

Receipts  of,  company  bound  bpr,  78 

Debitmg  premium  to,  effect  of,  79-95 

Uatiticatiou  by  receipt  of  premium  from,  90 

Delay  in  paying  premium  through  change  of,  91 

Days  of  grace,  receipt  of  premiums  after,  by,  94 

To  pay  premium,  promise  by,  96 

Concealment  by,  155 

Misrepresentation  by,  156 

Insurance  vitiated  by  misrepresentation  or  concealment  of  agent,  although 

policy  effected  by  another,  165 
"The  life"  insured  may  of  the  insured  be,  166 
Notice  to,  of  change  of  business,  170 
General,  authority  of,  422-428 
Policy  not  to  bo  granted  by,  423,  481 
Representations  of,  whether  binding,  423 
Del  credere,  insuring,  428 
Writing  answers  for  assured,  423 
Extending  time  fur  paying  premium,  4'24 
Commissiou  to,  agreement  by  directors  for  payment  after  agency  ceased, 

424 
Authority  of,  varied  by  private  instructions,  426 
Without  instructions,  420 
Notice  to,  what  suilicient,  426,  432 
Mistaken  instructions  to,  company  bound  by,  426 
Authority  of  sub,  427,  436-436 
Insuring  in  wrong  company,  427 
Credit  to,  of  premium,  427 
Credit  by,  of  premium,  428,  429-431 
Payment  of  premium  cannot  be  dispensed  by,  428 
Payment  of  premium  by  cheque  to,  428 
Insuring  himself,  428,  429 

Privileged  communications  between  company  and,  429 
For  two  companies  re-insuring  one  in  other,  429 
Cross  account  of,  with  a^ent  of  other  company,  480 
Not  acting  within  authority,  yet  company  uound,  4h0 
False  representation  by,  where  assured  told  truth  to,  480 
SpeciKc  performance  of  contract  of,  431 
Powers  of  local,  431 

Company  not  bound  to  grant  policy  where  preminm  paid  to,  481 
Appncations  received  but  not  accepted  by,  431,  482 
Forfeiture,  waiver  of,  by,  482,  433 
To  dispense  with  conditions,  power  of,  432 
Filling  up  proposal,  effect  of,  432-4ii4 
War,  effect  of,  on  acts  of  foreign,  4IJ4 
Indorsement  of  policy  by,  436 
Fraud  of^  effect  of,  on  company,  486 
Contracting  outside  company's  bUsinesB,  487 
Contracting  outside  his  authority,  437 
Insuring  for  another  does  not  warrant  interest,  489 
Insuring  for  another  without  authority,  489 
To  effect  policy  caimot  ai^ust  loss,  440 


Negligently  insuring,  liable  to  assured,  441-442 
878 


INDEX.  483 

(The  paging  refers  to  the  [•]  pagOH.] 

AGENT— ( Continued). 

Commission  not  receivable  from  insurer  and  insured  by,  442 

Discount  does  not  belong  to,  442 

Assured  affected  by  fraud  of,  442 

Principal  bound  by  knowledge  of,  442 

When  "the  life  "  is  of  insured  the,  443 

Whether  medical  man  in  of  insured  the,  443 

Employed  to  procure  assurance,  authority  of,  443 

AlyTERATIONS— 

Of  premises,  whether  covered  by  policy,  109 

AMALGAMATIONS— 
What  it  is,  403 
Ultra  vires,  404,  410 
Power  to  contract  for,  not  implied,  404 
Ratification  of,  when  ultra  vires,  ^5 
Power  of,  how  given,  406 
Policy-holder's  claiui  utler,  406 
Costs  of  liquidating  companies  ail'T,  406 
Policy-holders,  when  found  bv,  40(i-410 
Effect  of  on  creditorsj  407 -4('« 
Effect  of  covenant  to  indemnify  on,  408 
Effect  of,  on  sbarehoiders,  408-410 
Of  life  offices,  leave  ot  Court  requisite,  409 
Effect  of  successive,  il'i 

AMBIGUITY— 

In  policy  may  be  cleared  by  cus  om,  ri-32 

ANNUITANTS— 

Are  creditors  of  ccmpany,  399 

Whether  receipt  by,  amounts  to  novation,  418 

ANNUITY— 

Policy  effected  by  grantee  of,  340 
Policy  effected  by  mortgagee  of,  340 
Insurance  of  arrears  of,  o41  , 

APPOINTMENT— 

Of  policy  to  executors  of  settlor,  883 

APPORTIONMENT— 

Of  premiums,  not  within  Apportionment  Act,  97 
Of  premiums,  not  if  risk  attached,  98 

Of  insurance-money,  where  insurance  by  mortgagor  oad  mortgagee  in  differ 
ent  offices,  293 

APPURTENANCES— 

Recovered  for,  as  part  of  freehold,  61 

ARBITRATION— 

Ouster  of  JuriBdiction  of  Courts  by,  209-212 
Common  Law  Procedure  Act,  1864,  as  to,  212 
Ascertaining  amount  before  action  by,  218 
When  all  liability  disputed,  218 
Condition  to  refer  to,  214 
When  iVaud  charged,  214-216 

879 


484 


INDEX. 


[The  paging  refers  Ui  the  [•]  pages.] 
ARBITRATION— ( CoMf/Hwed). 

Question  of  law,  whether  referable  to,  210 

Waiver  of  right  to,  216 

Specific  performance  of  agreement  to  refer  to,  216 

Regarding  Railway  Passengers'  Assurance,  217 

Whether  assured's  refusal  to  submit  to,  is  an  answer  to  his  claim,  253 

ARSON— 

Whether  within  fire  risk,  1 15-116 

Danger  of,  to  be  disclosed,  117 

By  assignor  of  policy,  1 15 

By  mortgagor,  effect  of.  on  mortgagee's  policy,  119 

By  wife  or  relation,  119 

Proof  of,  119-201 

Defence  of,  201 

ASSIGNEE— 

Takes  assignor's  title,  316 
Affected  by  fraud  of  assignor,  317 
Insurer's  knowledge  of  fraud  upon,  317 
Whether  company  trustee  for,  396 

ASSIGNMENT— 

Effect  on,  of  arson  by  assignor,  1 15 

Effect  on,  of  suicide  by  assignor,  133-134 

Of  fire  policy  by  one  partner  to  another,  181 

Of  claim  after  loss,  183 

After  breach  of  condition,  183 

Owner  may  give  carrier  benefit  of  insurance 


without  breach  of  condition 


against,  231 


Of  property,  whether  assignor  can  recover  on  policy  after,  297-300 

Of  life  and  fire  policies  different,  298  n   (./) 

Of  fire  policy,  whe  -her  legal,  298-  00 

Of  fire  policy,  whether  insurer's  consent  necessary,  298,  800-302 

Of  fire  policy  must  accompany  property,  800 

Pledge  of  flre  policy  no  breach  of  condition  against,  810 

Of  life  policy,  »y  what  law  construed,  310,  415-41tt 

Of  life  policy,  notice  of,  810-813 

Of  life  policy,  effect  of,  810-815     • 

Of  life  policy,  how  made,  810-317 

Of  life  policy,  right  to  sue  under,  311 

Of  life  policy,  form  of,  under  Policies  of  Assurance  Act,  812 

Of  life  policy,  effect  of  under  Policies  of  Assurance  Act,  813 

Of  life  policy,  effect  of  Judicature  Act,  314 

Agreement  for,  without  delivery  of  policy,  814 

Of  life  policy,  what  does  not  amount  to,  815,  81C 

Before  winding  up  relieves  assignor,  B  8 

Validity  of,  not  affected  by  length  of  time  between  uotlce  of,  to  company  and 

death  of  as.>iured,  319 
Of  policy  enforceable  by  specific  performance,  319 
Of  policy  carries  bonus,  820 
Of  policy,  proper  covenants  in,  820-821 
Whether  authority  to  hold  policy  amounts  to,  824 
Of  policy  otherwise  void  good  as  charge,  824 
By  bankrupt  secretly,  324 
By  felon,  825 

Inchoate  settlement  amounting  to,  8'.'5 

Of  policy  for  benefit  of  wife,  whether  her  consent  necessary,  828 
By  married  women  of  trust  polity,  886 
380 


INDEX. 

[The  paging  refers  to  tlip  [  •  ]  pages.] 

ASSURED— 

Cunnot  make  profit,  2-3,  4-3 

Cannot  release  third  parties  to  insurer's  prejudice,  5 

His  nedigence  within  policy,  G 

Not  oldiged  to  run  the  risk,  7 

Must  f\i\\y  disclose  risk,  9 

Duty  of,  in  case  of  fire,  10-11 

Cost  of  performing  such  duty,  11-12 

May  rescind  contract  induced  by  insurer's  fraud,  ;J2-33 

Where  policy  obtained  by  fraud  of,  course  open  to  insurer,  33 

Infant  may  be,  35 

Married  woman  may  be,  35 

Cannot  evade  law  by  insuring  nominally  for  himself,  39 

Has  insurable  interest  in  own  life,  39 

Interest  of,  in  subject  of  insurance  must  be  lawful,  44 

Need  not  have  legal  interest,  47-48 

Any  one  wi  h  interest  may  be,  49 

Death  of,  within  days  of  grace,  104 

Going  beyond  limits,  106 

Neglii;ence  of:  loss  from,  116 

Wilful  act  of,  loss  from,  116 

Duty  of,  to  save  property,  126 

Death  of,  caused  by  person  entitled  to  policy-money,  131 

Material  facts  must  be  disclosed  by,  r")2-163,  159-161 

Material  facts  must  be  disclosed  by  every  agent  of,  155 

Statement  of ''  the  life  "  as  agent  of,  165 

What  need  not  be  disclosed  by,  164 

Defence  to  action  by,  when  insurance  paid,  227-229 

Assignment  by  insurers  of  subrogated  rights,  defence  to  action  by,  229 

Not  to  prejudice  insurer's  rights,  231 

Re-insurance  discharged  by  payment  to,  280 

Has  no  lien  on  re-insurance  poliry,  i  60 

Character  of,  to  be  disclosed  on  re  insurance.  2i'.5 

Interest  of,  not  defeated  by  mortgage,  303 

Going  abroad,  whether  policy  avoided,  3"il. 

Presumed  to  read  answers  written  for  him  by  agent,  428 

Affected  by  agent's  fraud,  442 

Notice  to  broker  of,  not  notice  to  insurer,  442 

Correct  description  of,  462 

AVERAGE— 

Condition  as  to,  246 

Two-thirds  clause  248 

Clause  in  fire  policy  as  to,  249 

When  goods  in  lighters,  250 

Difference  in  fire  ond  marine  assurance  of,  240 

BAKER— 

"  Stock-in-trade  of,"  what  covered  by  policy  on,  82 

HAILEES— 

As  to  ineuring  for  full  value,  52,  65-67 

Goods  held  in  trust  by,  56,  181 

Insurance  bv,  and  by  bailor,  240 

Insuring  owii  and  bailor's  goods  without  authority,  440 

BAILOR— 

Insurance  by,  and  by  bailee,  240 

381 


485 


I'  1 


486 


INDEX. 


[The  paging  refern  to  the  [  *  ]  pageM.] 

BANKRUPT— 

Insurable  interest  of  creditors  in  esmte  of,  67 

Whether  insured  can  sue  when  a,  182 

Policy  of,  passes  to  trustee.  820,  472  * 

Procuring  renewal  of  policy  to  creditor,  320 

Secret  assignment  of  policy  by,  824 

Premiums  paid  by  mortgagor  when  a,  ^89 

Whether  policy  iiasses  to  trustee  of,  472 

Proof  for  amount  of  policy  where  company  is,  473 

To  whom  policy-moneys  faielong  when  premiums  paid  by,  475 

Disclaimer  by  trustee  of,  476 

Surety  for  payment  of  premiums  due  from,  4T6 

Voluntary  settlement  of  policy  by,  470 

BILL  OF  SALE— 

Whether  holder  of,  entitled  to  proceeds  of  policy,  284 

BILLS  OF  LADING— 

With  direction  to  insure,  64 

BONUS— 

Whether  it  passes  by  contract  to  assign  policy,  820 
Whether  trnsts  of  policy  include,  a28 
Deduction  of,  from  calls,  378 
Whether  income  or  capital,  39'< 
Novation  by  acceptance  of,  411 

broker- 
As  to  insuring  full  value,  52-54 
Lien  of.  on  policy,  3o0 
Employed  to  obtain  policy,  authority  of,  430 

BROTHER— 

Sister's  insurable  interest  '"n  life  of,  40 

BUILDING— 
«  Is  insured  qua  building,  252 

"BURNT  OR  NOT  BURNT"— 

Insurance  as,  28,  46 

CANCELLATION— 

Of  policy,  notice  of,  for  agent  for  procuring  insurance,  448 

CARRIER— 

Insuring  for  full  value,  52,  55-56 

Insuring  goods  held  iu  trust  by,  50 

Risk  of,  when  it  begins  and  ends,  100 

Negligence  of,  causing  loss,  1 16 

Insurer  has  subrogation  against,  230 

Owner  of  goods  may  give  oenefit  of  insurers  to,  231 

CERTIFICATE— 

Of  loss,  by  magistrate  Ac,  192 

CHILD - 

Insurable  interest  m  parent's  life,  40 
382 


INDEX. 
[The  paging  refers  to  the  [  ♦  J  pages.1 

CLAIM— 

Condition  as  to  fraud  in,  197 

False  statement  in,  198 

Excessive,  whether  fraudulent,  199-200 

Mistake  in,  200 

Application  of  funds  set  apart  to  answer  immediate,  397 

How  valued  on  winding  up  of  company,  401 

COFFEE-HOUSE— 

Whether  hazardous  trade,  110 

COMMISSION— 

Whether  insurable,  41 

Not  payable  to  agent  by  insurer  and  insured,  442 

COMMISSION  AGENT  - 

Insurance  for  full  value  by,  57-58 

COMPANIES  FOR  INSURANCE— 
Varieties  of,  360 
How  formed,  862 
Registration  of,  366-372 
Deeds  of  settlement  can  be  inspected,  367 
What  are,  under  Companies  Acts.  307,  379 
Beason  for  incorporating,  368 
Contracting  tiftra  »irc»,  368-371 
Using  seal  informally,  369 
Business  of,  must  conform  to  constitution  of,  870 
Form  of  contracts  of,  371 
Appointment  of  solicitor  by,  372 
Debentures  in  fraud  of,  373 
Powers  of  investment  of,  374 
Holdingoflandby,  379 
Deposit  of  £20,000  by,  381 
Keeping  accounts  of,  383 
Life  assurance  funds  of,  to  be  separate,  383 
Balance-sheet  of,  to  be  lodged  with  Board  of  Trade,  P84 
Actuarial  investigation  of  affairs  of,  384 
Contribution  to  hre  brigade,  386 
Whether  policy-holder  creditor  of,  387,  894 
Whether  policy-holder  can  interfere  in  management  of,  387,  394 
Whether  policy-holder  a  contributory  of,  }  89 
Funds  of,  how  liable  for  loss,  390 
Surplus  profjts  of,  what  are,  390 
How  liability  of.  limited,  392 
Funds  of,  include  unpai<i  calls,  393 
Whether  trustee  for  assignee  of  policy,  395 
Whether  shareholder  can  be  sued,  396 
Annuitants  are  creditors  of,  399 
Claims  against,  how  valued  on  winding  np  of,  401 
Whether  amalgamation  of,  without  consent  of  Court,  409 
Resuscitation  of,  for  winding  up,  410 
Proceedings  against,  where  Scotch  or  Irish,  420 
Judgment  against,  in  one  part  of  United  Kicgdom  cnforcoablo  in  other  parts, 

420 
General  agent  of,  authority  of,  423 
Mistaken  mstriictions  to  a^ent  of,  426 
Bound  where  intention  to  insure  in  other  company,  427 

888 


::  V 


483 


INDEX. 


[The  paging  refers  to  the  [  •  ]  pages.] 
COMPANIES  FOR  INSURANCE-CCon^HMed). 
Agent's  fraud,  effect  of,  on,  430 
MuHt  grant  policy  if  premium  retained,  486 
Can't  adopt  agent's  contract  outside  business  of,  437 
Can't  adopt  policies  of  other  companies,  437 
Contract  of  agent  beyond  authority  ratified  by,  437 
Can  ratify  after  loss,  438 

CONCEALMENT— 

Return  of  premiums  where,  80-87 

Of  maternity,  141 

Of  imprisonment,  141 

Of  material  fact,  150 

By  not  answering  question,  151 

What  it  is,  153 

By  insurer,  152 

By  agent,  155 

Of  claim  on  other  office,  157 

Of  illness,  157-161 

Of  fire  to  adjacent  property,  158 

Purchaser  of  policy,  how  affected  by,  161 

Discovery  before  payment  by  insurer  of,  161 

Ofother  insurance,  173 

Of  refusal  by  other  company,  206 

CONDITION— 

Precedent  must  be  performed,  l44 

Broken  policy  voidanle,  i  63 

New  agreement  after  breach  of,  164 

Payment  in  ignorance  of  breach  of,  164 

Usual  in  fire  policy,  165 

As  to  user  of  property,  166 

As  to  removal  of  property,  166 

Suspensory  during  forbidden  user,  166 

Evidence  to  explain,  167 

As  to  hazardous  business,  167 

,,     change  of  business,  167 

,,     disclosing  other  insurances,  173 

„  „  „  „  waiver  of,  175 

,,     double  insurance,  175 

,,        „  „  in  foreign  company  176 

,,        „       _     ,,  by  interim  receipt,  176 

As  to  double  insurance,  second  insurance  on  part  of  property,  175 

,,  „  „         binds  assignee  in  banlkruptcy,  175 

„  „  J,         policy  not  issued,  176 

,,     change  of  title,  1 78 

,,    execution  against  property  insured,  179 

,,     shifting  policy  to  other  property,  180 
Waiver  of  breach  of,  182,  192,  203 
Mortgagee  recovering  for  mortgagor  who  broke,  182 
Limiting  time  to  sue,  182 
As  to  notice  of  loss,  184 
Precedent  to  insurer's  liability,  184 
As  to  verification  of  loss,  187 

„  M  „  waiver  of,  191 

,,    fraud  in  claim,  196  . 

,,    procurement  of  fire,  196 

,,    entry  of  premises  by  insurer,  200 

384 


INDEX.  4^9 

[The  paging  refers  to  the  [  •  ]  pages.] 
CONDITION— ( Continued). 

As  to  reinstatement,  201 

,,    forfeiture  of  premiums,  203 
Usual  of  life  insurance,  203 
Licence  to  break,  205 
As  to  omissions,  206 

„     misrepresentations,  206 

,,     military  service,  207 

„     arbitration,  214 

„    subrogation,  237 

„    contribution,  243 

,,    average,  246 

,,    two-thirds  clause,  248 
That  re-insured  should  retain  certain  amount  of  insura  rice,  264 
Limiting  Ti  ii  •  for  recovery,  2';6 
As  to  furnishing  proofs,  how  complied  with,  266 
ludpector's  power  to  dispense  with,  438 

CONSIGNEE— 

Insuring  for  full  value,  52-57 

Merchants  compelling  insurance  by,  53-54 

Bills  of  lading  received,  with  directions  to  insure  by,  64 

Contribution  where  insurance  by  consignor  and,  244 

CONSIGNOR— 

Contribution  where  insurance  by  consignee  and,  244 

CONSTRUCTION  OF  POLICY— 
General  rule,  28,  29,  80 
Written  words  prevail  over  printed,  29 
Rigid,  not  favoured,  29-30 
Against  insurer,  30 
In  popular  sense,  31 

Words  of  policy  supersede  custom,  31-33 
Custom  may  control  ambiguity,  31-32 

CONTRIBUTION— 

When  it  occurs,  6,  238 
Subrogation,  difference  between  it  and,  239 
Between  insurers  of  several  mortgagees,  240 
■  Condition  as  to,  243 
Where  insurance  by  consignor  and  consignee,  244 
Evidence  as  to  policy  being  one  for,  244 
Sjpecific  insurance  and,  245-247 
Effect  of  clause  as  to,  in  re-insurance  policy,  264 

Between  insurers  where  separate  policies  by  mortgagor  and  mortgagee,  296 
Between  sureties  where  one  has  paid  debt  and  obtained  policy,  345 
Right  of,  gives  no  lien  on  policy  money,  364 

CONTRIBUTORY— 

Executor  as,  376 

Whether  secretary  holding  shdres  as  trustee  for  company  is,  877 

Whether  vendor  still  on  register  is,  377 

Whether  bonus  deducted  from  calls  on,  378 

Not  exempted  by  forfeiture  of  shares,  378 

Liable  if  transfer  of  shares  incomplr   v  378 

Whether  promoter  is,  when  shares  fuiiy  paid,  878 

385 


490 


INDEX. 


to  insure. 


»» 


»» 


[The  pnging  refcrx  to  tho  [  *  ]  pagex.] 

corporation- 
No  insurable  interest  in  corporate  property  by  stock -holders  in,  48 

covenant- 
To  keep  up  policy  whether  broken  by  suicide,  180,  821 
By  tenant  to  repair  atid  insure  for  fixed  sum,  272 
excluding  fire,  272 
runs  with  land,  278 
is  usual  covenant,  374 
form  of,  274 
nncerlainty  m,  274 
damages  for  breach  of,  275 
„  ,,  relief  for  breach  of,  270 

„  ,,  antedating  receipt  does  not  cure  breach  of,  276 

„  ,,  in  landlord's  name,  effect  of,  278 

To  insure,  whether  policy  vested  in  covenantee  by,  315 
Proper,  in  assignment  of  policy,  320 

To  keep  policy  on  foot,  whether  broken  by  going  abroad,  321 
To  effect  and  settle  policy,  action  for  breach  of,  ;i22 
To  effect  and  settle  policy  by  husband,  whether  breach  of  it  excuses  breach 

by  V  ife's  father  of  his  covenant,  326 
To  insurt,  mortgagee's  power  of  sale  on  breach  of,  347 
To  keep  policy  on  foot,  power  of  sale  on  breach  of,  347 
To  keep  policy  on  foot,  damages  for  breach  of,  348   . 
To  repay  premiums,  damages  for  breach  of,  848 
Not  to  go  abroad,  damages  for  breach  of,  349 
To  pay  policy  out  of  special  funds,  395 
To  ludemuify  on  amalgamation,  408 

CREDITOR— 

Policy  of,  whether  indemnity,  13,  15,  16-17 

By  judgment,  interest  of,  68 

Interest  in  bankrupt's  estate,  68 

Debtor's  interest  in  life  of,  69 

Interest  of,  in  debtor's  life,  69 

Interest  of,  in  surety's  life,  69 

For  gaming  debt  has  no  insurable  interest,  69  ' 

For  debt  incnired  during  minority,  69 

Paid  since  policy  can  recover,  70 

Can  recover  though  debt  becomes  statute  barred,  70 

Fully  secured  insurable  interest  of,  70 

Insuring  lifo  of  debtor's  wife  who  assigns,  70 

Must  pursue  authority  given  by  debtor,  78 

Insurance  by,  on  debtor's  life,  whose  is  it,  341-843 

Assignment  of  policy  to,  on  trust  to  pay  own  debt  and  pay  over  surplus, 

389-341 
Cannot  compel  debtor  to  insure,  842 
Whether  policy-holder  is,  387,  394 
Whether  annuitant  ia,  399 
Not  affected  by  limited  liability  to  policy-holder,  400 

CUSTOM— 

Words  of  policy  prevail  over,  81-82 
May  control  ambiguity,  81-32 

CUSTOM,  ANNUITY,  AND  BENEVOLENT  FUND— 
Insurance  under,  822 

386 


u 

»> 


INDEX. 

[The  paging  refers  to  the  [  •  ]  pagei.] 
DAMAGES— 

In  action  for  negligence  not  reduced  by  insurance,  19 
Secus,  if  death  occurs  through  the  negligence,  20 
Indirect,  not  recoverable,  22SJ 
For  breach  of  covenant  to  insure,  275 

keep  policy  on  foot,  348 

repay  premiums,  848 
,,  _  „  not  to  go  out  of  Europe,  349 

Whether  insurance  money  deducted  from,  445 

DAYS  OF  GRACE— 

What  are,  9:^ 

Premium  unpaid  and  loss  during,  93 

Insurer  cannot  terminate  contract  during,  93-94 

Whether  insurer  bound  to  receive  premium  during,  93-94 

Payment  of  premium  after  death,  but  during,  95 

„  „         after,  95 

„  ,,         within,  and  death  within,  104 

DEATH— 

Campany  liable  though  policy  not  issued  before,  101 

If  not  within  period  of  insurance,  company  not  liable,  108 

By  law,  whether  within  policy,  129 

By  suicide,  whether  within  policy,  IRO 

By  unlawful  operation,  whether  within  policy,  130 

By  drowning,  whether  within  policy,  130 

By  duelling,  whether  within  policy,  130 

By  own  hands,  130,  133 

Caused  by  person  eifectin^  insurance,  131 

Onus  of  proof  where  suicide  cause  of,  133,  456 

Deduction  of  insurance  from  damages  where  negligence  cause  of,  446 

From  fall  when  catching  train,  whether  accident,  &5 

In  water,  drowning  presumed,  455 

By  train  running  over  when  seized  with  fit,  456 

From  ruptured  blood-vessel  by  using  clubs,^4o6 

From  inflammation  after  rupturing  blood-vessel,  457 

Within  accident  policy  when  solely  from  accident,  457 

From  erysipelas  caused  by  wound,  457'458 

From  overaose,  457-458 

From  operation  for  hernia,  458 

From  fall  from  joist,  458 

From  fall  from  engine,  459 

From  fall  from  mounting  carriage,  459 

Amount  of  compeusation  in  case  of,  by  railway  accident,  450,  461 

Proof  of,  461 

DEBENTURE— 

Intra  vires,  but  in  fraud  of  company,  873 

DEBT-  ^ 

Gaming,  gires  no  interest,  69 
Incurred  during  minority  may  give  interest,  69 
Paid  since  policy  does  not  avoic  insurance,  70 
Statute  barred  before  drooping  of  life,  70 
When  fully  secured  givts  Intereet,  70 
Creating  liea  gives  interest,  70 

887 


491 


492 


INDEX. 


DEBTOR— 


[The  paging  refers  to  the  [  *  ]  pages.] 


Interest  in  creditor's  life  of,  69-70 

Interest  of  creditor  in  life  of,  69 

Wife  of,  securing  debt,  creditor  may  insnre  her  life,  70 

Interest  of  one  joint  debtor  in  life  of  another,  70 

Insurance  by  creditor  on  life  of,  341-344 

Whether  charging  with  premiums  makes  policy  belong  to,  342 

Not  compellcbJe  to  insure  for  creditor's  benefit,  346 

DEPOSIT— 

Of  policy  as  security,  298,  810,  855 

Of  policy  by  person  out  of  jurisdiction  with  one  within  jurisdiction,  357 

Of  £20,000  by  life  companies,  881,  418 

DESCRIPTION— 

Of  property  must  be  accurate,  104,  160 
Partially  true,  168 
Substantially  true,  160 

DEVIATION— 

From  route,  effect  of,  on  insurance,  100 

DIRECTORS- - 

Ultra  vires  acts  of,  not  binding,  868 

Discretionary  powers  of,  869 

Informal  use  of  seal  by,  369 

Policy  issued  by  ostensible,  869 

Power  of,  to  pay  loss  not  within  policy,  874 

Must  contribute  for  qualifying  shares,  878 

Powers  of,  presumed  to  be  known,  422 

Payment  of  commission  by,  after  agency  determined,  424 

Appointed  to  select  agents  at  commission,  436 

Vacate  office  when  participating  in  profits,  425 

Fraudulent  contract  of,  void  against  assignee  for  value,  425 

Notice  to,  482 

DISCOUNT— 

Belongs  to  principal,  not  to  agent,  442 

DISEASE- 

Must  be  disclosed,  189 
Predisposition  to,  189 
Requiring  confinement,  189 
"Local,'^wbat  it  is,  189 
Fits,  meaning  of,  140,  149 
Oout,  meaning  of,  140 
Spitting  blood,  meaning  of,  141 
Drinking  habits,  meaning  of,  142 
Furiiishnig  particulars  of;  161 
Insiu-pd  unconscious  of,  158 

DOMICILE— 

Of  company,  where  it  is,  414 

DONATIO  MORTIS  CAUSA— 
Life  policy,  subject  of,  808 
888 


INDEX. 

IMJTXT17-  ^^*  paging  refer"  to  the  [  •  ]  pages.] 

DRINK.— 

Meaning  of  "under  influence  of,"  167 

DRIVING— 

Not  exposure  to  unnecessary  risk,  458 

DROWNING— 

Whether  death  by,  within  life  policy,  130 

*'  "  "       accident  policy,  456 

Where  death  in  water,  presumption  of,  465 

DRYING- 

Eiln  used  for,  110 

DUELLING- 

Death  by,  130 

DWELLING— 

Gaol  described  as,  169 
Room  described  as,  162 

ELECTRICITY- 

Whether  fire  risk,  115 

EMPLOYERS- 

Liability  of,  to  workmen  insurable,  462 

ENTRY- 

Of  premises  by  insurer,  202 

EQUITABLE  CHARGE— 
On  policy,  how  created,  855 

ERYSIPELAS— 

From  wound,  whether  within  accident  policy,  467 

EXCEPTION— 

Words  of,  to  be  taken  against  insurer,  30,  180 

EXECUTION— 

Effect  of,  on  right  to  policy,  182 
Whether  policy  can  be  tahien  in,  859 

EXECUTOR— 

Insurable  interest  of,  67 
De  son  tortf  interest  of,  68 
Not  bound  to  insure,  68 
Should  keep  up  policy,  349 
As  contributory,  876 

EXPECTANCY— 

Whether  insurable,  48 

EXPLOSION— 

Whether  fire  risk,  118 

EXTINGUISHING  FIRE— 
Damage  from,  120 


493 


889 


494 


INDEX. 


[The  paging  refers  to  the  [*]  pages.] 

factor- 
As  to  insaring  full  value,  68 
As  to  his  interest,  58 

PALL- 

When  catching  train,  whether  accident,  456 

On  railway  in  fit,  456 

From  joist  of  floor,  458^ 

By  engine-driver  applying  brake,  459 

Whilst  mounting  moving  carriage,  459 

Whilst  passing  from  car  to  car,  560 

FELON— 

Assignment  of  policy  by,  825 

FIRE— 

Assured's  dnty  to  avert,  10 

Duty  of  assured  in  case  of,  10-11 

Cost  of  performing  such  duty,  how  borne,  II-I3 

Whether  insurance  on  ship  marine  risk,  12 

Insurer  liable  for  loss  caused  by,  not  exceeding  amount  of  policy,  16 

Before  date  of  policy,  27 

Does  not  include  explosion,  31 

Policy  npt  issued  before,  company  yet  liable,  100 

Whether  more  than  one,  covered,  100 

To  a^'acent  property,  disclosure  of,  105 

Date  of  ascertainment  of  property  protected  from,  107 

Property  in  transitu  not  protected,  107 

What  the  word  includes,  112 

Heat  without,  112 

Without  ignition,  112 

Case  of,  immaterial,  113 

By  friction,  113 

By  chemical  action,  118 

By  vegetable  fermentation,  113 

By  lightning,  115 

To  a^acent  property,  disclosure  of  danger  of,  117 

By  incendiary,  118 

By  master  of'^ship,  120 

Extinguishment  of,  damage  from,  120 

Removal  of  goods  to  escape,  123 

Saving  property  from,  cost  of,  122-125 

Thefl  during,  128 

Usual  conditions  in  policy  against,  163-169 

Connivance  at  condition  as  to,  198 

Through  accident,  tenant's  liability  for,  270 
„       negligence,  tenant's  liability  for,  270 
„  „  tenants  may  insure  against,  271 

,,  ,,  covered  by  ordinary  policy,  271 

Whether  rent  payable  in  case  of,  273 

loss  from,  falls  on  purchaser,  801 
policy  passes  with  beneficial  interest,  801 
„     against  runs  with  lands,  801 
,}  „         „      passes  on  sale  of  property,  802 

Notice  nf  assignment  of  policy  against,  811 

FIRE  BRIGADE— 

Companies'  contribution  to,  886 
890 


ft 
»» 


INDEX. 


495 


[The  paging  referM  to  the  [  •  ]  pages.] 

HTS— 

What  meant  by,  140-149 

Death  in  water,  whether  caused  by  drowning  or,  455 

Falling  on  railway  in,  456 

FIXTURES— 

Reinstatement  of,  284 

FOREIGN  CONTRACT—  , 

Law  applicable  to,  415-416 

FOREIGN  INSURANCE  COMPANY— 
Need  not  be  re^isiered,  414 
Trading  here,  liability  of  members  of,  416 
Trading  here  under  conventions,  415 
Law  applicable  to,  415-419 
'  Provision  of  policies  of,  in  different  jurisdictions,  418 
As  to  deposit  of  £20,000  by,  418 
How  to  proceed  against.  419 
Agents  of,  when  contract  foreign,  419 
Judgments  against,  in  one  part  of  the  United  Kingdom  enforceable  in  othar 

parts,  42 1 
General  agent's  authority,  424 

FORFEITURE— 

Of  premium  when  policy  wager,  45 

Of  policy  not  favoured,  75 

Insurers  may  be  estopped  from  setting  up,  75 

Payment  of  overdue  premium  after  death  will  not  prevent,  79 

By  delay  in  paying  premium,  91 

Of  premium,  condition  as  to,  144,  196 

Of  policy  waived,  165 

Not  cured  by  antedating  receipt,  276 

When  not  enforceable,  276 

Waiver  of,  by  accepting  rent,  277 

Relief  against,  277 

Mortgage  of  leaseholds  may  oppose,  296 

Of  shares  does  not  exempt  from  contributing,  878 

Credit  of  premium  by  agent  after,  429 

Waiver  by  agent  of,  43^ 

FRAUD— 

Of  assured,  cancellation  of  policy  for,  31 

In  obtaining  policy,  refusal  of  insurer  to  pay,  81 

Waived  bjr  accepting  premiums,  81 

Course  of  insurer  where  policy  obtained  by,  81,  88 

Of  insurer  contrary  to  contract,  effect  of,  81-82 

Cancellinif  policjyr  for,  81-32,  162 

Return  of  premiums  in  case  of,  87 

Delivery  up  of  policy  for,  162 

Compromise  in  ignorance  of,  166 

In  claim,  condition  as  to,  198 

Excessive  claim  not  conclusive  of,  200 

Arbitration  where  charges  of,  214,  215  _ 

Of  assignor,  and  recove-y  by  insurer  of  money  paid  to  assignee,  817 

Duty  of  insurer  aware  that  assignee  deceived  by,  817 

Of  ageot,  assured  affected  by,  442 

391 


!l 

li 
i 


496 


INDEX. 


■  [The  paging  refers  to  the  [  •  ]  pagea.1 
FREIGHT— 

Whether  insnrable,  41 

FRIENDLY  SOCIETY— 
Insurance  by,  131,  823 

FURNITURE— 

During  removal  not  within  fire  risk,  107 

GAS- 

Whether  fire  risk,  114  . 

GAMBLING  ACT— 

Makes  insurable  interest  necessary,  36 
Only  value  of  interest  recoverable,  87 
Not  in  force  in  Canada,  87  ' 

In  force  in  Ireland,  37 
Not  to  be  evaded,  89 

GAMBLING  INTERESTS— 
Not  insurable,  44,  45 

GIFT— 

Of  policy,  825 

GOODS— 

Sold  but  not  delivered,  insurance  of,  46,  60-61 

Held  in  trust,  insurance  b^  carrier,  66 

Held  in  trust  or  on  commission,  insurance  by  forwarding  agent,  S6 
,«  t,  „  insurance  by  wharfinger,  67 

„  ,.  „  meaning  of,  58,  59,  60 

With  vender  at  buyer's  risk,  60,  61 

Not  separated  from  bulk,  62 

Test  of  interest  on  sale  of,  66 

Specific  description,  whether  necessary,  107 

What,  within  policyj  107 

Loading,  whether  within  risk,  107 

GOUT— 

Answer  to  question  as  to  having  had,  140,  149 

GUARANTEE  INSURANCE— 

Whether  writing  necessary  for,  465 

Not  limited  to  fraud.  465,  469 

What  to  be  disclosed  on  effecting,  465-466  > 

Nature  of,  465-466 

Rights  of  surety  in  case  of,  466 

Contents  of  policy  of,  467 

Whether  continuing,  469 

Bv  guardians  of  poor,  468 

Change  of  mode  of  business,  effect  of,  on,  409 

Amalgamation,  effect  of,  on,  460 

Renewal  of  contract  of,  469 

Partner's  retirement,  effect  of,  on,  470  > 

Subrogation  applies  to,  470 

Liquidators  may  avail  themselves  of,  470 

Receivers  may  avail  themselves  of,  470 

392 


I 


INDEX. 


497 


GUNPOWDER  - 


[The  paginK  refers  to  the  [  •  ]  pogM.] 


I 


Not  covered  by  policy  on  hardware,  32 
Whether  fire  risk,  1 14 

HARDWARE- 

Gunpowder  not  covered  by  policy  on,  82 

HAZARDUOUS  TRADE- 

Whether  coffee-house  is,  110 
Whether  inn  is,  1 10 
Extra  risk  from,  169-170 
Whether  liquor-selling  is,  170 

,,        use  of  kiln  is,  170 
As  an  experiment,  171 
Whether  use  of  oven  is,  172 

,,        u;e  of  engine  is,  172  ^ 

HEALTH— 

Non-disclosure  of  change  of,  before  issue  of  policy,  155,  816 
Meaning  of  "being  in  good,"  433 

HIRING  AGREEMENT— 

Insurable  interest  under,  46-47 

HOT  WATER— 

Whether  policy  covers  damage  by,  115 

HUSBAND— 

May  insure  for  wife  and  children,  36 
,,  wife's  separate  estate,  51 

ILLEGAL  INSURANCE— 
Void,  82-44 

Insurance  on  unlicensed  premises  may  be,  83 
Gambling  interests  are,  44-45 
Insurance  of  seamen's  wages  is,  44 
Separation  of  legal  from  illegal  interests  in  same  policy,  44 
Notice  to  abandon,  85 
Whether  premium  returnifble,  85-86 

INCOME  TAX- 

What  profits  chargeable  with,  898 

INDEMNITY— 

Fundamental  principle  of  insurance,  1-2,  221 

Not  always  complete,  2 

Not  applicable  to  life  insurance,  2 

Consequences  of  principlcj  4-5,  234 

Whether  creditor  s  policy  is,  15-17 

la  against  loss  not  accident,  221 

Insurance  on  property  is,  221-223 

What  is,  222 

Rule,  "  new  for  old  "  is,  223-257 

Whether  valued  policy  is,  221-226 

Subrogation  part  of  law  of,  227-230 

Money  received  by  insured  in  excess  of,  is  insurer's,  283 

Explained  on  insurance  by  mortgagee,  284 

Insured  not  to  receive  more  than,  239 

Whether  accidental  insuraace,  contract  of,  446 


>     3 


893 


498 

INFANT- 

May  insure,  85 


INDEX. 


[The  paging  refers  to  the  [  •  ]  pages.] 


INFLAMMATION— 

From  ruptured  blood-vessel,  whether  within  policy,  457 

INJUNCTION— 

Misapplication  of  funds  restrained  by  374,  891 
To  restrain  use  of  name,  367 

INN— 

Whether  hazardous  trade,  110 

INSURABLE  INTEREST— 
Always  necessary,  13,  14,  36 
Assured  cannot  recover  beyond,  13 
Must  exist  at  time  of  insurance  and  loss,  13,  15 
Any  one  with,  may  insure,  35,  49,  50 
Wife  presumed  to  have,  in  husband's  life,  35 
Husband  not  presumed  to  have,  in  wife's  life,  85 
Except  in  Scotland,  35 
Only  value  of,  recoverable,  37,  50 
Definition  of,  37-39 

Precise  nature  of,  need  not  be  stated,  87 
Consignee  has,  37 
Prize  agent  has,  37 
Insurer  has  to  re-insure,  38 
Any  person  has,  in  his  own  life,  89 
Whetner  relationship  gives,  40 
Parent  in  child's  life,  40 
Son  in  father's  life,  40 

Moral  certainty  of  having  property  does  not  give,  40 
Bankrupt  has,  42 
Execution  debtor  has,  42 
When  must  exist,  42 
Theatrical  manager  in  actor's  life,  42 
Heir  of  person  non  compus,  42 
Borrower  from  insurer,  42  • 

Employed  in  employer,  43 

Railway  company,  in  houses  exposed  to  sparks  from  engine, 
Employer  in  employed,  43 
Must  be  an  enforceable  one.  43 
Value  of,  at  date  of  policy  recoverable,  48 
Must  be  lawful,  44 
Kinds  of,  deed  not  be  specified,  46 
Qualified  interest  may  amount  to,  46 
Right  of  property,  not  necessary  to  constitute,  47 
Tortious  disseisor  may  have,  46 
In  goods  sold  but  not  delivered,  46 
In  house  built  on  wrong  laud,  47 
In  substituted  goods,  47 

Stockholders  in  a  corporation  none  in  corporate  body,  48 
Risk  alone  may  constitute,  47,  49 
Legal  interest  not  necessary  to  constitute,  47-48,  68 
Equitable  interest  gives,  48-49,  68 
Does  not  depend  upon  quantum  of,  50 
Landlord  has,  60 
Tenant  has,  60-51 

394 


INDEX. 

, [The  paging  refers  to  the  [  ♦  ]  pages.] 

INSURABLE  INTEREST-(eo«<i,med;. 

Bailees  have^  62,  65-68 

None  until  nsk  attached,  54 

None  after  stoppage  in  transitu,  55 

In  goods  sold,  but  not  delivered,  46,  60-61 
„  held  in  trust,  59-61 

„         held  on  commission,  68 
„  held  by  vendor  at  buyer's  risk,  60-61 

„  not  separated  from  bulk,  61  -  62 

Without  liability  to  pay,  62 

Liability  to  pay  constitutes,  62 
1,  loss  constitutes,  62 

Courts  lean  in  favor  of,  62-63 

Undivided  interest  gives,  62 

Manufacturer  has,  63 

Of  purchaser,  60,  61,  64 

Of  unpaid  vendor,  G4,  65 

Of  paid  vendor  who  has  not  conveyed,  65 

When  vendor's  interest  ceases,  65 

Where  sale  in  fraud  of  creditors,  66 

Covenant  to  insure  gives,  66 

In  gaming  debt,  69 

In  debt  incurred  during  minority,  69 

In  debt  fully  secured,  70 

Of  one  joint  debtor  in  life  of  another,  70 

Although  voidable  policy  good,  71 

Requisite  in  accidental  insurance,  71 

Absence  of,  only  defence  to  insurer,  73 

Of  executor,  67 

Of  executor  de  son  tort,  67 

Of  mortgagor,  67 

Requisite' for  re-insurance,  259 

INSURANCE— 

Differs  from  wager,  7 

,,         ,,      suretyship,  8 
Requires  uberrima  fides,  8 
Must  not  exceed  value  of  interest,13 
Against  accident,  nature  of,  19 
No  defence  to  action  for  negligence,  19 
Whether  contract  of,  to  be  in  writing,  20-21 
Where  illegal  is  void,  34,  44 
On  unlicensed  premises  void,  32 
Subject-matters  of,  must  be  correctly  described,  45 
By  trustee  presumed  to  be  qua  trustee,  67 
Against  accident  within  statute  as  to  interest,  71 
Name  of  person  for  whom  effected  must  appear,  71 
By  partner  in  firm's  namc^  71 
Voidable  where  premium  m  arrear,  91 
Payment  of,  by  mistake,  96 
Ultra  vires,  premium  returnable,  98 
When  it  expires.  99 
Termination  of,  W  insurer,  102 
Local  limits  of  life,  106 
For  under  value  whole  amount  payable,  129 
Where  partial,  what  proportion  of  loss  payable,  129 
Without  any  representation,  168 
Declined  by  other  office,  lit 


499 


395 


500 


INDEX. 


[The  paging  refers  to  the  [  •  ]  pages.] 

I NSURANCE— ( Continued). 

In  other  offices,  disclosure  of,  173,  175 

Subsequent  disclosure  of,  174,  177 

In  two  companies,  disclosure  of,  175 

Second  by  mortgagor,  whether  double  insnrance,  176 

In  foreign  company,  whether  double  insurance,  176 

By  interim  receipt,  whether  double  insurance,  176 

Second  on  part  of  premises,  whether  double  insurance,  177 

General  principles  of  insurance  law  apply  to  ail,  144 

Trustee  in  banlcruptcy  bound  by  condition  as  to  other,  177 

Against  fire,  what  covered  by,  178 

In  Friendly  Society,  131,  217,  218,  328 

Specific,  what  it  is,  V47 

Be-insurance  drops  with,  265 

Whether  covenant  to  effect  vests  policy  in  covenantee,  815 

Under  Customs  Annuity  Benevolent  Fund  Acts,  822 

Through  Post  Office,  828 

By  creditor  on  debtor's  life,  339,  841 

By  mortgagee  on  annuity,  840 

Court  cannot  compel  debtor  to  effect,  346 

INSURANCE  COMPANY— 

Vide  "  Companies  for  Insurance." 

INSURER— 

Not  liable  beyond  actual  loss,  3,  4 

Entitled  to  rights  of  assured,  5 

Several  insurers  contribute,  6 

Effect  of  knowledge  that  risk  cannot  be  ran,  9 

Cost  of  protecting  property,  how  borne  by,  11 

Not  liable  on  policy  contrary  to  its  terms  for  own  fraud,  81 

Course  open  to,  where  policy  obtained  by  fraud  of  assured,  31 

Can  plead  want  of  insurable  interest  notwithstanding  failure  to  cancel  policy 

for  fraud,  32 
Payment  into  court  by,  818,  858 
.     Absence  of  interest  defence  to,  78 
General  inquiries  by,  187 
Material  facts  must  be  disclosed  to,  152 
Knowing  as  much  as  insured,  158,  164 
Misrepresentation  by,  154 

Payment  by,  atter  knowledge  of  misrepresentation,  161 
Whether  private  knowledge  of,  alters  assurer's  duty,  163 
Disclosure  by,  to  insured,  162,  163 
Limit  of  time  to  sue,  184 
Notice  to,  of  loss,  186 
Conditions  precedent  to  liability  of,  186 
Reinstating,  entitled  to  old  materials,  225 
Cannot  require  party  primarily  liable  to  be  sued,  226,  281,  238 
Payment  by  no  defence  to  action  by  assui'ed,  229 

Assignment  by,  of  subrogated  rights  defence  to  assurer's  action,  229,  287 
Right  of,  to  salvage,^  330 

Sumg  tortfeasor  subject  to  same  defence  as  assured,  230,  237 
Entitled  to  subrogation  against  carrier,  230 
Liability  of  joint  and  several,  2!^8 
Contribution  between  several,  238 
'    Option  of,  to  reinstate,  261 
Can  recover  from  re-insurer  on  payment,  263  , 

Can  recover  from  re-insurer  costs  of  defending  action  by  assured,  268 

396 


INS 


IN' 

IN 
IN 
IN 

li 
L 


INDEX. 


501 


[Tlie  paging  refers  to  the  [  •  ]  pages.] 

INSURER— {Continued). 

Must  reinstate  if  required,  252 

Duty  of,  when  aware  that  assignee  of  policy  is  deceived,  317 
Advancing  on  policy  cannot  avoid  it  and  claia,  payment,  324 
"  Own  Insurer,"  what  it  means,  442 

INTEREST— 

On  policy  money,  816,  358 

INTERIM  INSURANCE— 26-27 

INTERIM  NOTE— 25-26 

INTERIM  RECEIPT— 2G-27,  176,435 

INTERPLEADER— 

Whether  insurer  should  have  recourse  to,  858 

INVESTMENT— 

By  insurance  company,  powers  of,  874 

LANDLORD— 

Insurance  of,  beyond  own  interest,  50 

Insurance  of,  forfeited  by  tenant  increasing  risk,  169 

And  tenant,  agreement  between,  as  to  reinstatement,  267 

„        separately  insuring,  effect  of,  272,  278 
Not  bound  to  rebuild,  278 
Whether  entitled  to  rent  in  case  of  fire,  274 
Effect  of  covenant  by  tenant  to  insure  in  name  of,  278 
May  require  iusiuer  to  reinstate,  278 

LEGAL— 

Interest  not  necessary  to  insure,  48 

May  mean  "lawful"  in  proviso  avoiding  policy,  324 

LESSEE— 

Being  mortagor,  not  to  pay  policy  money  to  raortagee,  287 
Under  covenant  to  repair,  lessor's  right  to  insurance,  287 
„  „  insure,  lessor's  right  to  insurance,  287 

,,  ,,  „        and  reinstate,  no  lien  for  money  spent  in  rein' 

stating,  287 

LETTERS— 

Evidence  of  right  to  policy,  844 

LIEN— 

Gives  insurable  interest,  48-49,  55,  71 

Of  trustee  advancing  on  policy,  <{27 

Of  policy  money,  how  created,  851-855 

Payment  of  premium  by  stranger  does  not  give,  853 

Whether  payment  by  part  owner  gives,  853 

„  ,,  by  mortagor  gives,  854 

•  „  „  by  tenant  for  life  gives,  854 

,,  ,,  under  voidable  assignment  gives,  854 

Right  of  contribution  does  not  give,  354 
By  deposit  of  policy,  855,  857 
Of  insurance  broker,  856 
Of  solicitor,  356 

Drops  with  policy,  867  ^ 

897 


1 1 

I    i: 


i^ 


502 


INDEX. 


[The  paging  referH  to  the  [  •  ]  pagen.] 


LIFE  INSURANCE— 

Not  indemnity,  13,  17,  806 
Definition  of,  18 
Legality  of  trust  policy  of,  66 
Wliat  risks  may  be  taken  in,  189 
Does  not  cover  death  by  law,  129 
,,  ,,         suicide,  130 

General  inquiries  by  insurers,  137 
Conditions  of,  204 
Dispositions  of  policy  of,  300 
Policy  not  withm  order  and  disposition  clause,  808 

„         a  negotiable  instrument,308 
Gift  of  policy  where  possession  retained,  308 
Whether  succession  auty  payable  on,  346 
Policjr  is  property,  347 

Applicability  to  mortgage  debt  of  proceeds  of,  347 
Power  of  mortg^ige  to  sell,  347,  348 

LIGHTNING— 

Whether  damage  by,  is  a  fire  risk,  116 

UMITATION— 

Of  time  to  sue  for  loss,  184,  188 

LINEN 

What  policy  on,  covers,  32 

LIQUIDATORS- 

May  effect  guarantee  insurance,  470 

LOCALITY— 

Risk  affected  by,  105 

No  rectification  of  mistake  in,  106 

Information  must  be  given  to  insurer  as  to,  107 

Wherein  policy  operates,  206 

Insured  gone  beyond,  206 

LOSS— 

Insurer  liable  for  actual,  8,  4 
Recovery  by  limited  owner  beyond  own,  60-51 
Marketable  value  as  measure  of,  50-51 
Tender  of  premiums  after,  90 

Whether  more  than  one  covered  by  same  policy,  101 
From  inherent  faults,  106 
Proximate  cause,  regarded,  115,  122 
From  attempts  to  extinguish  fire,  120 
„  „  escape  fire,  121,  123 

Assured's  auty  to  avert,  122 
By  theft  during  fire,  123 
In  transitu,  125-126 
To  apparel  whilst  worn,  127 
To  live  stock  off  premises,  128 
To  locomotive  chattels,  128 
Covered  anywhere,  if  no  place  specified,  128 
Time  to  sue  for,  18J,  188 
Notice  of,  to  insurers,  186 
Agent's  adjustments  of,  189 
Particulars  of,  190 

398 


i 


INDEX. 


503 


[The  paging  refers  to  tlic  [  *  ]  pages.] 
LOSS — ^  Continued). 

Delay  in,  notice  of,  190 

Veriticatiou  of,  condition  as  to,  191,  193 

„  by  magistrate,  &c.,  191 

Affidavit  of,  193 
Proof  of,  187,  191,  193,  190 
Timo  for  payment  after  proof  of,  194 
Valuation  of,  194,  197 
Mistake  as  to  cause  of,  195 
Overcharge  for,  195 

Insurance  is  not  indemnity  against  accident,  but  against,  221 
Ascertainment  of,  before  suing  for,  197 
Not  within  policy,  director's  power  to  pay,  374 

MANUFACTURER— 

Insurable  interest  in  unfinished  work,  63 

MARKETABLE  VALUE— 
As  measure  of  loss,  50-51 

MARRIED  WOMAN— 

Policy  shown  to  be  for  benefit  of,  by  parol,  21 
Presumed  to  have  insurable  interest  in  Busband's  life,  35,  307 
Insurance  of,  under  Married  Women's  Property  Act,  86,  329,  331 
Husband's  insurance  for  benefit  of,  and  children,  39,  3*29,  831 
Under  Married  Women's  Policy  of  Assurance  (Scotland)  Act,  1880,  337,  338 
Husband  may  insure  separate  property  of,  51 

Consent  of,  whether  necessary  to  assignment  of  policy  for  her  benefit,  328 
Policy  of,  on  husband's  life  for  her  separate  use  and  children,  whether  hus- 
band can  deal  with  it,  329 
Policy  before  Married  Women's  Property  Act  surrendered  for  one  after,  331 
Canadian  law  as  to  policy  by  husband  for,  333 
Assignment  of  trust  policy  by,  326 
Policy  for,  not  issued  until  husband's  death,  337 

MATERIAL  FACT— 

Disclosure  of,  152,  155,  160,  164 
Whether  question  for  jury,  152 
Whether  refusal  by  otner  office  to  insure  is,  157 
,    Must  be  stated  under  general  question,  160 

Purchaser  of  policy,  how  affected  by  concealment  of,  lOl 

MEDICAL  ATTENDANT- 

Who  considered  to  be,  141,  158 

Wrong  reference  to,  158 

Non-disclosure  of,  206 

Whether  agent  of  insured,  443 

"Whether  death  within  accident  policy  when  from  treatment  by,  457 

MERCHANT— 

Insurance  for  foreign  correspondent  by,  54 

Bills  of  ladirg  received  with  directions  to  msure  by,  54 

MISDESCRIPTION— 

Of  premises,  163 

Of  residence,  159,  162 

399 


' 


504 


INDEX. 


[The  paging  refers  to  the  [•]  pages.] 


MISREPRESENTATION  AND  CONCEALMENT— 

Return  of  premiums  where,  87,  88 

Chapter  on,  152 

By  insurer,  154  .' 

Statements  must  be  true  when  contract  actually  made,  165 

By  any  agent  of  assured  vitiates  policy,  156 

By  insurer's  agent,  156 

By  life  insured,  156 

A  a  to  temperate  habits,  156 

Innocent  as  to  health,  168,  161 

As  to  residence,  159 

On  re-insurance,  161 

Forfeiture  of  premiums  through,  161 

Discovery  of,  by  insurer  before  payment,  161 

As  to  part  of  property,  163  , 

As  to  incumbrances,  1(53 

Agent's  knowledge  no  excuse  for,  197 

By  life  insured,  208 

MISTAKE— 

In  policy  whether  rectified,  22,  106 

In  policy  whether  waived,  24 

In  policy  not  rectified  and  polic);  rescinded,  24 

As  to  existence  of  thing  insured,  return  of  premium,  7 

Payment  of  insurance  through,  9'i 

In  proofs  as  to  cause  of  fire,  195 

In  stating  claim,  201 

Of  agent  filling  up  proposal,  433 

MORTGAGE- 

Contribution  between  insurers  in  case  of,  240-241 
Does  not  defeat  assured's  interest  in  policy,  "03 
Of  life  policy,  by  deposit,  310 

„        „        notice  of,  310-312 
Satisfaction  of,  before  insurer's  pay,  819 
Proceeds  of  policy  applicable  to,  under  Conveyancing  Act,  347 
Of  life  policy,  what  it  should  contain,  350 
To  insurers  of  land  and  policy,  latter  cannot  be  set  off,  400 

MORTGAGEE— 

Insurance  beyond  own  interest,  50,  234,  23Q 
Insurable  interest  o<;  69,  234,  281 
Policy  of,  whether  affected  by  mortgagor's  arson,  119 
Double  insurance  by,  176 
^        Subrogation  of  insurer  to  right  of,  235 

Whether  he  can  recover  from  mortgagor  after  being  paid  by  insurer,  288 
Further  advances  by,  whether  fire  policy  extends  to,  283 
Mortgagor's  interest  in  policy  of,  283 
Right  of,  to  charge  premiums,  283-284,  289,  346 
Proceeds  of  policy  of,  whether  applicable  to  rein'^tatement,  288 
Obligation  or,  to  reinstate  fixtures,  284 
Interest  of,  in  mortgagor's  policy,  284 
Right  of,  to  insure  under  Conveyancing  Act,  1881,  284 
Tenant  for  life  paying  insurance  money  to,  286 
Right  to  insure  under  Settled  Land  Act.  1882,  286 
Oilessee  who  insured  not  entitled  to  policy  money,  288 
Under  bill  of  sale  whether  entitled  to  policy  money,  288 
Joint  insurance,  au4  hy  mortgagor,  289 
400 


INDEX. 


50.1 


[The  paging  refers  to  tlio  [*]  pnges.] 

MORTGAGEES  Continued). 

Subrogation  of  insurer  to  rights,  against  mortgagor,  291 
Contribution  where  separate  insurance  by,  and  by  mortgagor,  'iU'i,  •JO.'i 
Apportionment  where  separate  insurance  by,  and  by  nioragor,  2it;'. 
W  hetber  receiver  appointed  by,  must  insure,  293 

„         bound  to  account  to  martgagor  for  policy  money,  2'Xi-  94 
Can  only  recover  amount  of  his  debt,  294 
Of  leaseholds  can  resist  forfeiture,  296 
Recovery  by,  of  premiums  against  mortagor  personally,  3;59 
Policy  by,  on  life  of  mortgagor  belongs  to,  3;59 
Of  annuity,  insurance  by,  340 

Whether  pcyment  of  premiums  by,  divests  mortgagor's  riglit  In  policy,  i\4:\ 
Evidence  that  policy  to  be  assigned  by,  on  redemption  of  security,  .544 
Entitled  to  policy  effected  by  him  on  life  of  cestui  qui  vie,  34»J 
Power  of  sale  of,  on  breach  of  covenant  to  insure,  347 

I,  ,,  ,,  ,  keep  policy  on  foot,  347 

Power  of,  to  appoint  receiver,  347 
Upon  trust  cafinot  sell,  347 

When  also  insurer  premiums  allowed  to,  as  just  allowances,  349 
Whether  bound  by  mortgagor's  novation,  412 

MORTGAGOR— 

Insurable  interest  of,  G7,  281 

Assignment  of  policy  of,  to  mortgagee,  G8 

Whether  liable  atler  mortgagee  paid  by  insurer,  23fi 

Interest  of,  ceases  on  foreclosure,  281 

Interest  of,  mortgagee's  policy,  283 

Being  lessee,  should  not  pay  policy  money  to  mortgagee,  287 

,,  with  covenant  to  insure  and  reinstate,  has  no  lien  on  policy  for 

money  expended  in  reinstating,  287 
Joint  insurance  with  mortgagee,  289 

Premiums  paid  by  mortgagee  whether  chargeable  to,  290,  339 
Subrogation  of  insurer  to  mortgagee's  right  against,  291 
Separate  insun.     j  by,  and  by  mortgagee,  whether  insurer  entitled  to  con- 

tril)ution,  292,  295 
Insurance  by,  and  bv  mortgagee  iu  different  offices,  appointment  of  amount, 

293 
Whether  mortgagee  bound  to  account  to,  for  proceeds  of  his  policy,  293-394 
Payment  by,  of  premiums  af\er  bankruptcy,  339 
Policy  on  life  of,  by  mortgagee  belongs  to  latter.  339 
V^' hether  right  to  policy  of,  divested  by  mortgagee  payir 


'  I 


paying  premiums,  343 


Evidence  that  policy  to  be  assigned  fo,  on  redemption  of  principal  security, 

344 
Whether  novation  by,  binds  mortgagee   412 

MORTMAIN— 

Whether  shares  of  insurance  companies  within,  379 

Whether  policy  secured  on  real  estate  of  company  within,  380,  394 

NAMK- 

Ofiiisuranco  company,  injunction  lorcstrain  use  of,  307 

NKGLIGKNCE— 

Of  assured  covered  by  policy,  0 

Gross,  when  evidence  of  fraud,  12 

Damages  in  action  for,  not  reduced  by  insurance,  19 

Except  where  assured  dies  through,  20 

Loss  from,  110  * 

26  PORTEH  ON  INSURANCE.  401 


ft06^ 


INDEX. 


[The  paging  refers  to  the  [*]  pages.] 

NEGLIGENCE— ( Continued). 

Subrogation  of  insurers  where  loss  caused  by,  25J3 

Tenant  8  liability  for  fire  through,  270 

Tenant  may  insure  against  liability  for  fire  through,  271 

Covered  by  ordinary  policy,  271 

Of  agent  insuring,  liability  for,  441-442 

Whether  insurance  deducted  from  damages  for,  445-44G 

Contributory,  dcfeuco  to  insurer  in  action  for  injury  by  railway  cccident,  4'>1 

notice- 
To  pay  premium,  92 
Of  change  of  business,  169 
Of  loss,  180,  190 
Of  loss,  condition  as  to,  188 
Of  mortgage  of  life  policy,  312 
Of  assignment  of  policy,  311,  313 

,,  ,,        must  be  acknowledge,  313 

„  ,,        given  by  first  incumbrancer  informally,  312 

„  ,,        not  to  be  delayed,  318 

,,  ,,        inquiry  as  to  previous,  313 

Whoso  duty  to  give,  where  policy  settled,  32ft 
Of  companies'  statutes  and  deeds  presumed,  368 
To  agent,  what  sufficient,  426,  432 
To  directors,  what  sufficient,  482 
To  solicitor,  who  is  also  insurer's  agent,  426 
To  assured' s  broker  not  notice  to  insurer,  442 
Of  cancellation  of  policy,  444 
Of  assignment,  whether  necessary  to  prevent  policy  passing  to  bankruptcy 

trustee,  472 

NOVATION— 

What  it  is,  402-407 

Proof  of,  402 

When  creditors  bound  by,  408-408 

When  policy-holders  bound  by,  406 

None  where  companies'  distinct,  409 

Whether  payment  of  premiums  is  evidence  of,  411 

Whether  acceptance  of  bonus  is  evidence  of,  412 

Claim  against  transferree  company  is  evidence  of,  412 

Whether  verbal  protest  will  prevent,  412 

When  policy-holder  is  sharenolder,  412 

Whether  by  mortgagor  binds  mortgagee,  412 

Whether  by  settlor  binds  trustee,  413 

Whether  receipt  of  annuity  omounts  to,  413 

OCCUPATION— 

Disclosiu'e  of,  143  • 

Description  of,  143 
Change  of,  1G9-173 

OCCUPIER- 

Insuranco  beyond  own  interest,  50-61 

OVERDOSE— 

Whether  within  accident  policy,  when  death  from,  457,  458 

OWNER— 

Insurance  beyond  own  interest,  50-52 
Equitable,  may  for  insuring  be  sole,  63,  04 

402         •: 


u 


INDEX. 


507 


[The  paging  refers  to  tl»o  [  •  ]  pages.] 

PARENT— 

Insurable  interest  iu  child's  life,  40 

PARTNER— 

Has  insurable  interest  in  capital  of  co-partner,  69 
Whether  assignment  by  one  to  another  avoids  policy,  181 
Amount  of  policy-money  recoverable  by,  48 
Insurance  by,  iu  firm's  name,  73 

PAWNBROKER— 

Itisurance  of  full  value  by,  53,  69 

PAYMENT— 

Of  premium,  policy  not  binding  until,  76 

Of  premium,  who  to  make,  92 

Of  premium,  during  days  of  grace,  92 

Of  premium,  by  cross  accounts,  95 

Of  premium,  delivery  of  policy  without,  70,  100,  101 

Of  policy  money,  by  mistake,  l»v> 

Into  court  by  insurers,  318,  5358 

By  insurer,  to  trustee  of  uolicy,  369 

Under  order  of  court,  indemnifies  insurer,  369 

Of  policy  money,  after  winding  up  order,  399 

Of  premiums,  nut  evidence  of  novation,  411 

PERITONTIS— 

From  blow,  whether  within  accident  policy,  457 

PLf:DGE-  - 

Of  fire  policy  not  an  assignment  within  the  condition,  310 

PLEDGEE— 

Insurable  interest  of,  69 

POLICY— 

Attaches  when  risk  begins,  8 
When  it  does  not  attach  after  risk  determined,  8 
Whether  fire  policy  on  ship  murine  risk,  13 
On  life,  not  indemnity,  17 
On  life,  is  contract  to  pay  sum  certain,  17 
On  life,  definition  of,  18 
Meaning  of  word,  20 
Verbal  promise  to  grant,  20 
Whether  necessary,  20-21 
Objects  of,  shown  by  parol,  31 
Not  delivered  may  support  action,  22 
May  be  rectified,  23-24 
Issued  after  loss,  23 

Person  interested  is  person  to  sue  on.  28 
Agreement  to  grant,  how  enforced,  23 
Not  according  to  agreement,  22-24 
Want  of  seal  to,  not  pleadable,  28 
Mistake  in,  waived,  24  , 

Alteration  ofj  24 

Rescission  of,  where  mistake  not  rectified,  24 
•     Cannot  be  added  to,  25 

Luas  of,  company  indemnified  on  payment,  25 


408 


508 


INDEX. 


[The  paging  refers  to  the  [  •  ]  pages.] 
FOLIC  Y—(  Continued). 

Dated  after  fire,  27 
"Open,"  28 
"Floating,"  28,  69 
Written  words  in,  govern  printed,  29 
Rigid  construction  of,  not  favoured,  29-30 
Words  of,  supersede  custom,  31-32 
Ambiguity  in,  custom  may  control,  31-32 

Course  ojien  to  insurer  where  policy  obtained  from  him  by  fraud,  33 
Cancellation  of,  for  fraud  of  assured,  31 
Refusal  of  insurer  to  pay  where  fraud  in  obtaining,  31 
Cancellation  of,  for  insurer's  fraud,  32 

Failure  to  cancel  for  fraud  will  not  prevent  insurer  pleading  want  of  inter- 
est, 32 
Title  to,  not  determined  by  payment  of  premiums,  39 
Assignee  of,  need  not  have  insurable  interest,  40 
Only  value  of  interest  at  date,  of  recoverable,  48 
"Blanket,"  59 
Trust  policy  legal,  66 

Name  of  person  for  whom  effected  must  appear,  71 
By  one  partner  in  firm's  name,  72 
"W'hether  to  be  under  seal,  72 
Forfeiture  of,  not  favored,  75 
Receipt  for  premium  in,  76 
Not  binding  until  premium  paid,  76 
Assigned,  return  of  premium,  84 
Invalid,  return  of  premium,  85,  86 

„        whether  insurer  must  grant  another,  86,  88 
Obtained  by  fraud,  whether  premium  returnable,  87 
Alteration,  effect  of,  87 
Fraudulent,  order  to  deliver  up,  87,  88 
Cancelled,  return  of  premiums,  88 
Condition  in,  as  to  forfeiting  premium,  89,  150 
Differing  from  proposals,  return  of  premium,  91 
Voidable  where  premium  in  arrear,  91 
Renewal  by  agent's  remittance  of  lapsed,  96 
"Lost  or  not  Tost,"  no  return  of  premium,  97  - 

Bpecific  performance  of,  agreement  to  grant,  97  * 

Ultra  vires,  jpremium  returnable,  98 
When  it  expires,  99 
Time  policy,  99 

Whether  property  protected  from  date  of,  108 
Death  before  issue,  101 
Risk  begun  before  granting  of,  10i>-101 
Fire  before  delivery  of,  lOO-lOl 
Covers  all  losses  up  to  amount  of,  101 
Date  of,  whether  inclusive,  102-103 
Duration  of,  102 

Strict  compliance  with  terms  of,  104,  166 
On  life  local,  106 

Whether  date  of,  time  for  accertaining  what,  covered  by,  107 
Whether  it  operates  if  house  vacant,  108 
Whether  avoided  by  increase  of  risk,  109 
Purchaser  of,  affected  by  concealment,  161 
Forfeiture  of,  by  misrepresentation,  161 
Delivery  up  of,  for  fraud,  162 
New  granted  on  old  proposal,  162 
Voidfuble  for  non-performance  of  condition,  166 

404 


INDEX. 


509 


[The  paging  refers  to  the  [  *  ]  pages.] 

VOLICY— {Continued). 

Waiver  of  forfeiture  of,  165-166 

Void  means  voidable,  105 

Against  fire,  usual  condition  in,  165,  175 

Ou  removal  ceases  to  attach,  168 

Suspended  during  forbidden  user,  168 

Not  issued,  whether  within  conditions  as  to  other  insurance   178 

Against  lire,  what  covered  by,  1 78  '  . 

„  whether  it  passes  to  real  or  personal  representatives,  181 

,,  assignable,  181 

„  bankruptcy,  effect  of,  on  right  to,  181 

■ ,,  execution,  effect  of,  on  right  to,  181 

On  life  condition  in,  205 
Void  for  going  beyond  limits,  205-206 
Sur  autre  vie  avoided  by  suicide,  207 
Without  benefit  of  salvage  illegal,  230 

Whether  contributir  -    ''idence  as  to,  244-245  * 

Specific,  what  it  is,  2:''l 

Whether  vendor  can  recover  on,  after  sale  of  property,  299 
Assignment  of,  must  accompany  property,  301 
Against  tire,  whether  itriins  with  land,  301 

,,  whether  it  passes  on  sale  of  property,  302 

,,  whether  it  passes  with  beneficial  interest,  302 

Ou  own  life,  how  it  may  be  dealt  with,  306 

„  assignable,  306,  310,  315 

,,  may  be  bequeathed,  307 

,,  subject  of  aona<io  mor^js  catwa,  307-308 

On  life,  whether  within  order  and  disposition  clause,  308-312 
,,  ,,        negotiable  instrument,  308 

,,      gifl  of;  where  possession  retained  by  donor,  308-309 
„      equitable  mortgage  of,  310,  315 
Right  to  sue  under  assignment  of,  311-313 
Notice  of  assignment  of,  311-312 

Must  specify  principal  place  of  business,  81 3  ' 

Agreement  to  assign,  814 

Whether  covenant  to  effect  vests  policy  in  covenantee,  315 
Deposit  of,  as  security,  316 
Interest  on,  316 

Change  of  health  before  issue  of,  317-318 
Effected  by  fraud,  insurer  can  get  back  money,  317 
Assigned  duty  of  insurers,  aware  of  invalidity  of,  317 
Vitiated  by  aggravation  of  concealed  illness,  318 
Assigned  before  winding  up,  effect  of,  818 
Specific  performance  of  contract  to  assign,  31i) 
Bonus  passes  by  contract  to  assign,  320 
On  own  life  passes  to  trustees  in  bankruptcy,  320 
Whether  avoided  by  going  abroad,  321 
Purchaser  of,  how  affected  by  assured's  concealment  of  charge  of  health, 

318 
Specific  performance  of  contract  to  assign  policy,  318 
Legal  means  "lawful,"  in  proviso  avoiding,  324 
Whether  authority  to  hold,  amounts  to  assignmeut  of.  324 
Insurers  advancing  on,  cannot  avoid  and  claim  payment,  824 
Assignment  of,  by  bankrupt,  secretly,  824 

,,  ,,    felou  before  conviction,  324 

Gift  of,  325 
Inchoate  settlement  of,  325 


If ames  of  persous  interested  must  appear  in,  826 


406 


If 


5J0 


INDEX. 


[The  paging  refers  to  the  [  *  ]  pagea.] 


;   I 


POLICY-  ( Continued) . 

Not  kept  up  trustee  may  sell,  327-328 
Whether  trustee  must  pay  premiums  on,  387 
Trust  of^  construed  like  other  trusts,  327 

„       cover  bonus,  328 
For  wife  and  children  under  Married  Women's  Property  Act,  329-336 
Issued  before  Married  Women's  Property  Act,  surrendered  for  one  after. 

831 
For  wife  not  issued  until  husband's  death,  337 

,,        assignment  by  her  of,  330 
By  creditor  or.  life  of  debtor,  338-346  ^ 

By  mortgagee  of  annuity,  340 

On  another's  life  generally  belongs  to  grantee  of,  341 
Letters  as  evidence  of  right  to,  344 
Lien  on,  how  created,  361 
Equitable  charge  on,  how  created,  365 
Lien  on,  drops  with,  367 
Whether  it  can  be  taken  in  execution,  359 

Where  void,  fresh  one  issued,  371  ,  . 

Ultra  vires,  370,  373,  393 
Loss  not  within,  payment  by  directors  of,  374 
Insurance  broker's  lien  on,  366 
Solicitor's  lien  on,  356 
Whether  within  mortmain,  381,  394 
Whether  company  trustee  for  assignee  of,  395 
Covenant  to  pay  out  of  special  funds,  395 

Value  of,  cannot  be  set  off  where  loan  by  insurers,  400  i    ' 

Endorsement  of,  by  agent,  435 
Of  one  company  cannot  be  adopted  by  another,  437 
Effected  by  unauthorized  agent,  adoption  of,  439 
Renewal  of,  must  conform  to  original  agreement,  440 
Of  guarantee  iusurauce,  contents  of,  467 

POLICY-HOLDER— 

Entitled  to  copy  of  statement  of  company's  business,  387 

„  „  shareholders  address  book,  387 

H  „  deed  of  settlement,  387 

Can  prevent  amalgamation,  387 
Whether  he  is  n  creditor,  387-394 

Cannot  interfere  in  management  of  company,  387,  391,  394 
Whether  liable  to  contribute  when  participating,  388 

•I  „  >,  in  mutual  company,  389 

Claim  of,  on  company's  funds,  when  it  begins,  391 

Whether  right  to  reel ver,  891  ' 

No  priority  over  other  creditors,  891 
In  mutual  society,  how  loss  of,  recoverable,  892 
Company's  liability  to,  how  limited,  392 

Covenant  to  pay  claim  of,  out  of  special  funds,  395,  897 
Appropriation  of  funds  for,  897 

Liniited  liability  to,  does  not  affect  creditors,  400  •  . 

Claim  of,  after  amalgamation,  406 

POLICIES  OF  ASSURANCE  ACT,  1807—  ' 

(30,  81  Vic.  c.  144),  808-316 

Passed  for  protection  of  companies,  813 

Not  to  regulate  priority  of  incumbrances,  812 

406 


>r 


PREMIUM- 


INDEX. 


[The  paging  refers  to  tho  [  »  ]  pages.] 


511 


Paid  before  attachment  of  risk,  is  .subject  thereto,  7 

Keturn  of,  where  risk  not  di.sclosed,  'J 
„  .,       ri.sk  not  run,  •,>.  l.'iO 

>»  ,.       pobey  rescinded  for  mistake.  24 

RepavTTKMit  of,  when  risk  rejected,  2.') 

Repayment  ot,  when  further  premium  (h-munded  and  refused  by  assured,  2r, 

Retainer  of,  liy  agent  may  not  constitute  faihire  of  company  to  repay,  25* 

Acceptance  of,  after  discovery  of  f -and,  ;  H 

Comjjany  niay  refu.se  to  take,  wliere  policy  obtained  by  fraud,  33 

Return  of,  were  jjolicy  cancelled  for  fraud,  .'53 

Payment  not  conclusive  an  to  title  to  policy,  39  ' 

Forfeited  when  policy  a  wager,  4.5 

Nature  of,  74      •  . 

Whether  prepayment  necessary,  75  , 

Waiver  of  non-{)ayment,  7(5,  79  .        ' 

,,        by  acceptance  of,  75,  79 

Credit  for,  76,  77  . 

Receipt  for,  in  jiolicv.  76 

Payment  of,  by  bill, '77 

Company  bound  by  agent's  receipt,  78 
,,  .,      du-ector"s  n^ceipt,  78 

Debiting  to  agent,  no  waiver,  7  i> 

Paymelit  of,  overdue  after  death,  79 

Acceptance  Ijy  company  after  death,  79 

Health  of  assured  when  overdue,  paid,  80  ' 

Returnable  where  no  risk,  80,  82 

Not  returnal)le  if  risk  Ijcgins,  80,  82 

Not  apporti()nal)le  if  risk  begins,  80 

Return  of,  where  in  excess  of  interest,  81,  82,  87  ' 

,,  ,,        several  policies,  81 

„  ,,        at  time  of  insurance  life  dead,  83 

H     ,       »>  n  ))  house  burnt,  83 

Apportionable  where  risk  partially  attached,  83 

Not  returnable  in  case  of  suicide,  83 

Returnable  where  risk  nev(;r  attached,  81,  82,  85 

Not  apportionable  in  time  ]>olicy,  84 

Not  returnable  where  fire  not  covered  by  policy,  841 

Not  returtmble  on  assignment  of  imlicy,  84 

Whether  returnabh;  in  life  insurance,  84,  85 

Parties  in  pari  ilclirto,  where  returnable,  85,  89 

Where  risk  run  not  returnable!,  8't 

Whether  returnable  where  illegal  insuratiee,  45,  85,  86 

Effect  of  breach  of  warranty  on  return  of,  150 

Whether  returnai)le  where  name  of  person  interested  not  in  policy,  86 

Whether  returnable  where  over  insurance,  87  " 

fraudulent  insurance,  87 
policy  ordered  to  be  delivered  up,  87 
policy  cancelled,  88 
misrepresentation  regarding  policy,  88 
concealment  regarding  the  msurauce,  8S 

WMiere  fraud  of  insurer,  wliethor  return  of,  89 

Forfeited  according  to  condition,  89,  204 

Additiotml  insurer  not  obliged  to  accept  89 

Tender  of  usual,  after  loss,  90 

Amf»unt  ot  evidence  as  to  materiality  of  misrepresentation,  90 

Payment  to  agent  without  authority,  90 

Receipt  from  ageut,  ratification  by  insurer,  90 

•407 


I 


'«i 


f. 


»> 

t» 

'       M    . 

»» 

H 

512 


INDEX. 


[The  paging  refers  to  the  [*]  pages.] 

PREMIUM— ( Continued). 

Returnable  by  agreement,  91 

Where  policy  differs  from  proposals,  return  of,  91 

Punctuality  m  payments,  91 

Delay  in  paying  through  change  in  agent,  91 

Belay  in  paying  through  change  of  company's  office,  91 

Who  to  pay,  92 

Notice  to  pay,  whether  necessary,  92 

-Dayslof  Grace,"92,  94 

Debiting  agent  with,  effect  of,  95 

Promise  ot  agent  to  pay,  96 

Cross  accounts,  payment  by,  95 

Delivery  of  policy  without  paying,  96 

Renewal  of  lapsed  policy  by  remittance  of,  96 

Unpaid,  and  policy  money  paid  by  mistrke,  90 

No  return  where  insurance  "lost  or  not  lost,"  97 

Not  within  Apportionment  Act,  97 

Effect  of  refusal  to  receive,  97 

Returnable  where  policy  tiltra  vires,  98 

Not  apportionable  if  risk  has  attached,  101 

Installments  of,  to  be  punctually  paid,  101 

Payment  and  death  within  days  of  grace,  104 

'vVhether  returnable  if  warranty  disproved,  160 

Not  returnable  where  term  of  contract,  150  • 

Forfeiture  by  misrepresentation,  161 

Payment  prevented  by  war,  206 

Paid  by  mortgagee  added  to  security,  291,  339 

Received  after  insurer  aware  that  policy  invalid,  818 

Not  paid  by  settlor,  trustee  may  sell  policy,  327 

Whether  trustee  must  pay,  327 

Paid  by  mortgagee,  whether  mortgagor  liable  for,  339 

Paid  by  mortgagor  after  bankruptcy,  339 

Whether  charging  debtor  with,  makes  policy  his,  339,  340 

Whether  payment  by  mortgagee  divests  mortgagor's  right  to  policy,  343 

Allowed  to  mortgagee-insurer  as  just  allowances,  349 

Whether  iJayment  of,  by  stranger  gives  lien,  853 
„  „  by  part-owner  ^ives  lien,  353 

,,  „  by  mortgagor  gives  lien,  354 

,,  ,,  under  voidable  assignment  gives  lien,  354 

What  divisible  as  profits,  390 

Payment  of,  not  evidence  of  novation,  411 

Credit  of,  to  agent,  427 

Credit  of,  by  agent,  428 

Agent  cannot  dispense  with  payment  of,  428 

Payment  by  cheque  to  agent  of,  428 

Returnable  where  policy  not  granted,  431,  436 

Overdue  waiver  of  forfeiture  by  receipt  oi,  433 

Payment  of,  to  foreign  agent  after  war  begun,  434 

If  retained,  policy  must  be  granted,  4S'6 

DirectioQ  to  accumulate,  whether  within  Tbellusson  Act,  478 

PRIZE— 

Whether  insurable,  42 

PROFIT— 

Assured  not  to  make,  2-8,  4,  13 

PROFITS— 

Whether  insurable,  41 
408 


r^ 


3 


■  \ 


INDEX.'  513 

(The  paging  refers  to  the  [*!  pages.] 
PROFITS-(  Conimued). 
What  are  surplus,  390 
All  premiums  not  divisible  as,  390 
What  are  annual,  398 
,,      „    chargeable  with  income  tax,  398 

PROOFS— 

Of  arson,  118,  201 

Preliminary,  187 

Of  loss,  186,  189,  193 

„         waiver  of,  193,  194 

„        time  for  payment  alter,  194 

,,        where  needless,  194 

,,         mistake  in,  195 

„         what  required,  195,  196 
What  ih  satisfactory,  197 
Of  accident,  what  requisite,  461 
Of  death,  461 

PROPERTY— 

Adjacent,  cost  of  saving,  11-12,  120,  122,  125 

,,        disclosing  danger  to,  1 1 7 

„        damage  to,  in  extinguishing  fire,  120 
Removal  of,  to  escape  fire,  122,  128 
Insured's  duty  to  preserve,  122 
Stolen,  during  fire,  123 
Lost,  during  fire,  123 
In  transitu^  126 

Out  of  place,  where  insured,  127-128 
Amount  payable  where  deficient  insurance  of,  129 
Misdescription  of,  160,  166 
Misrepresentation  as  to  part  of,  167 
Over-valuation  of,  200 

Sold,  recovery  by  vendor  of  insurance,  180-181 
Life  policy  is,  345 

PROPORTION—    "  , 

Of  loss  payable  where  under  insurance,  129 

PROPOSAL—  ^  ' 

Declined  by  other  office,  167 

Not  answering  question  in,  as  to  claim  on  other  office,  158 

Mistake  of  agent  filling  up,  434 

Accident  insurance,  what  must  be  stated  in,  452 

PURCHASER— 

Whether  fire  loss  fall  on,  301 

Of  policy  how  affected  by  assured's  concealment  on  change  of  health,  316- 
317 

QUESTIONS - 

Answers  to  general,  must  state  all  material  facts,  160 

RAILWAY  PASSENGERS'  INSURANCE— 

Arbitration  in  relation  to,  219 

Rights  against  third  persons  preserved,  446 

409 


I 


' 


n 


514  INDEX. 

[The  paging  refers  to  the  [*]  pages.] 

RATIFICATION— 

By  receipt  of  premium,  90 

Ut"  agent's  contract  outside  company's  business,  437 

„  his  authority,  437 

By  company  after  loss,  438 
General  principle  as  to,  438 
Of  insurance  for  another,  439 

RECEIVER— 

Appointed  by  mortgagee  whether  to  insure,  293 

Power  of  mortgagee  to  appoint,  347 

Right  of  policy-holder  to,  391 

May  effect  guarantee  insurance,  4(0 

REINSTATEMENT— 

Condition  as  to,  203,  255 
Statute  as  to,  203,  262 

Right  to,  203,252  ,      , 

Election  as  to,  203,  252,  257,  258  > 

By  insurer  gives  right  to  old  materials,  22o 
Option  for,  *.J51 

Metropolitan  Building  Act,  as  to,  252  ■_ 

To  what  applicable,  253 
Obligation  of  insurers  as  to,  2u3 
Notice  to  company  as  to,  254 

Enforcing  duty  as  to,  254  ,,,„,. 

Where  required  by  tenant  and  insurer  sued  by  landlord,  insurer  can  inter- 
plead, 256 
By  landlord,  insurer  not  to  pa^  for,  25;) 
By  tenant,  insurer  not  to  pay  for,  .65 
How  done,  255 
When  to  be  done,  255 

Fire  during,  257 

"  New  for  old,"  allowance  on,  257 

Landlord  and  tenant,  agreement  as  to,  257 

Insurer's  right  to,  not  affected  by  assured,  257 

Tenant  can  require,  271^  274,  278 

Landlord  can  require,  278 

Not  of  chattels,  284  ^      _.  oor 

By  mortgagor  on  request  of  mortgagee,  285 

By  lessee  under  covenant  for  insurance  and,  287 
Under  bill  of  sale  uo  right  of,  288 

REINSURANCE- 

What  may  amonnt  to,  27  • 

Misrepresentation  on,  161 
Insurer  has  insurable  interest  for,  259 
Nature  of,  269-260 
Where  insurance  ultra  vires,  259 
Not  after  winding-up  order,  260 
Assured  not  privy  to,  260 
Discharged  by  payment  to  assured,  ZW 
Whether  solvency  of  re-insured  affects  sum  payable  on,  *.bO 
Assured  no  lien  on  policy  of,  260 
What  re-insurer  undertakes  by,  201 
Where  several  policies,  261 
Where  condition  to  pay  as  may  be  paid,  262 
„  ,.  pro  rata,  262 

410 


RE 


U 


•^■ 


INDEX. 

[The  paging  refers  to  the  [  *  ]  pngcsi.} 
RE-INSURANCE— (Con<tnMcd). 

Payable  on  payment  l)y  insurer,  263 

Re-insiirer's  jiosition  in  action  by  assured,  203 

Effect  of  contribution  clause  in  policy  of,  264 

Condition  that  re-insured  retain  certain  risk,  264.  206 

Drops  with  insurance,  2B4 

Same  honafidex  as  on  insurance,  26.") 

What  must  be  disclosed  on,  2(55,  20(> 

Time  for  recovery  under  policy  of  runs  from  loss,  260 

Of  one  company  in  another  by  agent  of  both,  421) 

By  two  agents  keeping  cross  accounts  of  premiums,  430 

llEMOVAL— 

Of  goods  to  escape  firo,  121,  123 

To  other  residence,  insurer's  consent  to,  120 

,,  ,,  whether  property  protected  during,  127 

Temporary,  128 
Insurance  ceases  on,  108 

RENEWAL  RECEIIPT— 78  «o<e  (x) 

Of  lapsed  policy  by  agents'  remittance,  96 

Of  policy  must  conform  to  original  agreement,  440 

RENT— 

Insurance  by  tenant  of,  63 

REPRESENTATION— 

Premium  as  evidence  of  materiality  of,  90 

When  a  warranty,  144 

Importance  of  materiality  of,  144,  146,  162 

Or  mere  opinion,  147,  153 

Untrne,  without  assured's  knowledge,  149 

Insurance  without  any,  153 

Must  be  true  at  time  contract  of  insurance  made,  155 

Fraud  in,  154 

As  to  part  of  property,  163 

RESERVE  FUND—  • 

Whether  capital,  398 

RESIDENCE—  . 

Meaning  of,  159 

riot- 
Loss  from,  excepted,*  179 

RISK- 

Attaches  before  contract  complete,  7-8 
Premiums  returnable,  where  non-disclosure  of,  9 

,,  ,,  if  risk  not  run,  9 

Assured' s  duty  to  avert  occurrence  of,  10 
Cost  of  averting,  11-12 
To  adjacent  property,  11 
Constitutes  insurable  interest,  47 
If  none,  premiums  returnable,  80,  82,  85 
If  it  begins,  premium  not  returnable,  80 
If  it  begins,  premium  not  apportionable,  83 
Partially  attached  premium  ai)portionable,  83 


515 


411 


^1^ 


516 


INDEX. 


[The  paging  refers  to  the  [*]  pAgen.]  • 

RISK— (Continued). 

Not  disclosed,  insurer  not  bound  to  accept  additional  premium,  89 

"Lost  or  not  lost"  no  return  of  nreinium,  97 

Circumstances  affecting  must  be  aisclosed,  99 

Of  carrier,  when  it  begins  and  cuds,  99 

Deviation  may  terminate,  100 

If  attached  premium  not  apportionable,  101 

Due  to  inherent  faults,  105 

Locality  affects,  105 

Property  in  transitu  whether  within,  106,  106 

Goods  loading,  whether  within,  107 

Empty  house,  whether  within,  108 

Whether  increase  of,  avoids  policy,  109,  110 

Steam  engine,  what  user  of,  within,  109 

Alterations  of  premises,  109 

Friction  causing  fire,  whether  a  fire  riHk,  112-118 

Chemical  action,  whether  a  fire  risk,  113 

Fermentation,  whether  a  fire  risk,  113 

Explosion,  whether  a  fire  risk,  118,  114 

Gas,  whether  a  fire,  114 

Gunpowder,  whether  a  fire,  114 

Heat  without  ignition,  whether  a  fire,  116 

Hot  water,  whether  a  fire,  116 

Electricity,  whether  a  fire,  115 

Negligence,  fire  by,  whether  within,  116 

Wilful  act,  loss  from,  whether  within,  116 

From  incendiarism,  disclosure  of,  117,  119 

To  adjacent  property,  117 

Removal,  loss  from,  whether  within,  121,  128 

Theft  during  fire,  whether  within,  123 

What  may  be  taken  in  life  insurance,  129 

Hazardous  trade,  extra,  from,  168,  169 

Change  of  trade,  extra,  from,  168,  169 

Liquor-selling,  whether  increase  of,  169 

By  use  of  kiln,  169 

By  experiment,  171 

By  oven,  172 

By  engine,  172 

By  non-occupation,  172 

Bv  riot,  179 

Where  tiltra  vires,  373  . 

Driving  not  exposure,  458 

RUPTURE— 

Whether  within  accident  policy  when  through  jumping  from  train,  464 
Whether  within  accident  policy  when,  from  using  clubs,  456 
Of  blood-vessels,  inflammation  from,  457 
Death  from  operation  for,  468 

SALE  - 

Mortgagee's  power  of,  on  breach  of  covenant  to  insure,  347 
Mortgagee's  power  of,  on  breach  of  covenant  to  keep  policy  on  foot,  847 
Where  mortgage  on  trust,  no  power  of,  347 

SALVAGE— 

Expenses  of,  how  borne,  122,  126 

Illegality  of  policy  without  benefit  of,  230 

Insurer's  right  to,  2d0  . 

412 


SE 

81 
SI 


^^ 


^ 


INDEX. 


[Tlic  pitKinK  roferM  to  the  [  *  ]  pnnc^.] 


617 


8EAL- 

Informal  use  by  directors  of,  369 
What  contracts  must  be  under,  371 
Absence  of,  whether  a  defence,  371 

SECRETi^  RY— 

Holding  shares  ns  trustee  for  company,  whether  contributory.  ;?77 
SETTLEMENT— 

Of  policy,  exprPRsed  in  intention  to  make,  325 

Breach  of  covenant  by  husband  no  excuse  for  breach  by  wife's  father  of  cov 
enant  to  make,  cS*26 

Trustee  liable  for  enabling  settlor  to  dispose  of  policy  imder.  326 

Whether  trustee  may  sell  policy  not  kept  up  under,  327 

Whether  trustee  mu-t  pay  premiums  of  policy  under,  327 

Inspection  of  company  s  deeds  of,  367 

Directors'  non-compliance  with  provisions  of,  372 
*       Of  policy,  how  affectod  by  bankruptcy,  476 

SHARES - 

If  transferred  before  liquidation,  executors  not  liable  on,  370 

In  trustee's  name,  376 

In  secretary's  name  as  trustee,  377 

Liability  of  vendor  of,  378 

Sale  of,  to  person  who  cannot  be  registered,  377 

No  exemption  from  calls  of,  by  forfeiture  of,  378 

Incomplete  transfer  of,  before  winding  up,  378 

Promoters'  liability  to  contribute  on,  fully  ])aid,  378 

Directors'  liability  for  qualifying  number  of,  378 

In  company  holding  land  whether  in  mortmain,  380 

SOLICITOR- 

Lien  on  policy  of,  356 

Agreement  by  company  always  to  employ,  372 

Nature  of  claim  for  costs  of,  372 

SPECIFIC  PERFORMANCE— 

Of  agreement  to  grant  policy,  97 
Of  contract  to  assign  policy,  319 
Of  agent's  contract  to  insure,  431 

SPECIFIC  POLICY- 
What  it  is,  221 

SPITTING  BLOOD— 

Meaning  of,  141 

Untrue  statement  as  to,  156 

SPONTANEOUS  COMBUSTION— 
Whether  within  fire  policy,  179 

SPRAIN— 

Through  lifting  weight,  whether  wit^hin  accident  policy,  456 

STATUTES- 
IS  Eliz.,  c.  5,  824 

c.  12  (Statute  of  Asmirances),  8 


48Eliz.,  , 

19  Geo. II  ,  c.  37  (Insurable  Interest),  37.  50 


418 


518 


INDEX. 


[The  paging  refers  to  the  [  *  ]  pages.] 

STATVTES-iContiuued). 

14  Geo.  Ill ,  c.  48  (Gambling  Act).  13-14,  16,  M,  36,  44,  66,  71,  73 

14  Geo.  Ill,,  c.  78  (Metropolitan   Building  Act),  203,   252,   255,   283,  284, 

286,  302 
41  Geo.  IFL,  c.  57  (Royal  Exchange  Assurance),  .374 
56  Geo.  III.,  clxxiii.  (Customs  Annuity  and  Benevolent  Fund  Insurance), 

322 

6  Geo  IV.,  c.  36  (Royal  Exchange  Assurance),  375 
3  &  4  Wm.  IV  ,  c.  42  (Interest),  ho'.) 

7  Wm.  IV.  &  1  Vict.,c.  72  (Letters  Patent),  364 

6  &  6  Vict.,  c  39  (Factors  Act),  68 

7  &  8  Vict ,  c.  84(Metropc:itan  building  act),  283  , 
7  &  8  Vict.,  c.  110  (Joint  Stock  Companies),  364 

9  &  10  Vict.,  c.  93  (Lord  Campbell's  Act),  446 

12  &  13  vict'.',  c  74  }  (Trustees'  Relief  Acts),  318,  358 

17  &  18  Vict.,'c.  125  (Common  Law  Procedure  Act,  1854),  212,  217  , 

20  &  21  Vict.,  c.  14  (Joint  Stock  Companies),  365 

22  &23  Vict.,  c  35  (Lord  St.  Leonards  Act).  277,  377 

23  &  24  Vict ,  c.  145  (Lord  Cranworth's  Act),  290,  291 

23  &  24  Vict,  c.  126,  s.  2  (Common  Law  Procedure  Act,  1860),  296- 
25  &  20  Vict.,  c.  89  (Joint  Stock  Companies),  366 

27  &  28  Vict.,  c.  cxxv.  (Railway  Passengers'  Assurance),  19,  214,  219,  446 
27  &  '-^8  Vict.,  c  43  (Post-Office  Insurances),  324 

29  &  80  Vict ,  c  42  (Life  Insurance,  Ireland),  37 

30  Vict.,  c  23  (Marine  Policies,  Stamps),  21 

30  &  31  Vict.,  c.  144  (Policies  ot  Assurance  Act,  1867),  300,  308,  311,  312, 

315,  819 

31  &  32  Vict  c.  86  ( As.signees  of  Marine  Policies),  811 

83  &  34  Vict.  c.  61  (Life  Assuranco  Company  Act,  1870),  388 

!  3  &  34  Vict.  c.  93  (Maried  Women's  Property  Act,    1870),  22^  86,  136, 

329-331,  337 
83  &  34  Vict.,  c.  97  (Stamp  Act),  21 
34  &  35  Vict.,  c.  103  (Customs  Animity  and  Benevolent  Fund  Assurance), 

322 
36  &  37  Vict.,  c  66  (Judicature  Act,  1873),  298,  308,  314,  318 

''^  t  2o  Vict!;  c.'  83  }  (Friendly  Societies  Acts),  131,  217,323 

4::  &  43  Vict  ,'c.  9  (Friendly  Societies),  213 

43  &  43  Vict,  76  (Companies  Act,  1879),  376 

43  &  44  Vict.,  c  26  (Married  Woiaen's  Polices  of  Assurance,  Scotland,  Act, 

1880),  337 
43  &  44  Vict,  c.  42   (Employers'    Liability  Act),  43,  463,  4(54,   288,  290, 

292   296 
45  &,  46  Vict.,  c.  88  (f^ettled  Land  Act.  1882),  S86 

45  &  46  Vict.,  c.  75  (Married  Women's  Property  Act,  1882),  22,  80, 186,  307, 

880,  832,.  884,  836 

46  li  47  Vict,,  c.  52  (Bankruptcy),  472 

49  &  50  Vict,  c    3a  (Riot,  Damages,  Act),  180 

STEAM  ENGINE— 

User  of,   what  within  policy,  109 

STOPPAGE  IN  TRANSITU— 

Termiiuite  interest,  55 

Whether  right  of,  gives  title  to  insurance,  867 

414 


SI 


SI 
S' 
S' 


INDEX.  519 

[The  paging  refers  to  the  [  *  1  pages.] 

SUBROGATION— 

What  is  it,  287,  294 

None  ill  accidental  insurance,  10 

Gives  ii>3urer  right  to  damages  lecoverable  by  assured,  229 

As.signment  by  insurer  of,  rights  l)y  defence  to  a.ssured  action,  229  337 

Defences  against  assured  good  against  subrogated  insurer,  230       ' 

Insurer  entitled  to,  against  carrier,  230 

Re-insurer  entitled  to,  230 

Assured  recovering  damages  as  trustee  for  insurer,  231 

Ofinsurer  where  loss  through  negligance,  232 

Of  insurer  to  mortgagee's  rights,  235 

Condition  as  to,  237 

Valued  policy,  how  it  affects,  238 

ContribnJon,  ;^ifference  between  it  and,  230 

Ofinsurer  to  mortgagee's  rights  against  morrgagor,  291,  2% 

SUCCESSION  DUTY— 
•       Whether  payable  on  life  policy,  Si'i,  479 

SUE  AND  LABOUR  CLAUSE— 
In  fire  policies,  124 

SUICIDE- 

Premium  not  returnable  in  case  of,  81 

Whether  within  policy,  130,  132 

Meaning  of,  130,  132  ^ 

Not  mentioned  in  policy,  liil 

Presumption  against,  133,  456 

Whilst  insane,  133 

Effect  of,  on  assgnment  of  policy,  133,  134 

Usual  condition  as  to,  133 

Wheu'company  mortgagee  of  policy,  135  , 

When  covenant  to  keep  up  policy,  15^6,  821 

Policy  sur  autre  vie,  whether  avoided  by,  207 

SUNSTROKE— 

Whether  an  accident,  454 

SURETY— 

Interest  of  creditor  in  life  of,  69 

Interest  of  co-surety  in  life  of,  69 

Interest  of  surety  in  life  of  principal  debtor,  C9 

Paying  debt,  whether  entitled  to  policy,  345,  367 

Whether  ho  may  require  discharge  of  employee  makmg  default,  466 

SURETYSHIP 

Difference  between  insurance  and,  8 

TEMPERANCE— 

Statements  aa  to,  142,  156 
Disproof  of  warranty  as  to,  157 
Meaning  of,  187.  157 

TENANT—  ' 

Insurance  bpyond  own  interest,  60 
Insurance  of  rent  by,  51 
In  common  can  insure  full  value,  51,  62 
Joiut>teuaut  can  insure  full  value,  51,  63 

416 


I 


520 


INDEX. 


[The  paging  refers  to  Jhe  [  *  ]  pages.] 

TENANT- (Con^mwcrf). 

Policy  avoided  through  increase  of  risk  by,  169 

For  life,  whether  bound  to  insure,  267 

In  tail,  whether  bound  to  insure,  267 

In  tail,  whether  entitled  to  policy  money,  267 

For  life,  whether  entitled  to  jjolicy  money,  267 

For  years,  whether  bound  to  insure,  269 

Liability  for  accidental  lire,  270 

Liability  for  fire  through  negligence,  270 

When  bound  to  reinstate,  271 

Covenant  by,  to  pay  extra  premiums,  effect  of,  271 

For  life,  when  bound  to  rebuild,  273 

Insurable  interest  of,  when  under  covenant  to  repair,  272 

And  landlord  separately  insuring,  effect  of,  266,  267,  272 

Covenant  by,  to  repair  and  insure  for  fixed  sum,  272 

,,  to  repair  excluding  fire,  272,  273 

,,  to  insure  runs  with  land,  273 

Cannot  compel  landlord  to  rebuild,  278 
Can  require  insurer  to  reinstate,  274,  276 
Whether  liable  for  rent  in  case  of  fire,  274 
Damages  for  breach  of  covenant  by.  to  insure,  275 
Relief  against  breach  of  covenant  by,  to  insure,  276,  277 
Brench  by,  of  covenant  to  insure  not  cured  by  ante-dating  receipt,  276 
Effect  of  covenant  by,  to  insure  in  landlord's  name,  278 
Bound  to  insure,  having  option  to  purchase,  279 
Insurable  interest  of,  in  rent,  279 
For  life,  paying  policy  money  to  mortgagee,  286,  287 

THEFT- 

During  fire,  123,  124 

THELLUSSON  ACT— 

Direction  to  pay  premiums  whether  within,  478 

TITLE— 

Of  insured  property,  whether  material,  111 
Condition  aa  to  change  of,  180,  183 

rONTINE— 

Policy  not  gaining  contract,  45 

TRADE- 

Diaclosure  of  hazardous  nature  of,  108,  110 

TRUST— 

Validity  of  policy  on,  06 

Name  of  person  for  whom  effected  must  appear  in  policy  on,  06,  71,  72 

Of  policy  construed  like  other  trusts,  827 

Where  no  fraud  for  premiums,  sale  of  policy  on,  828 

Of  policy  includes  bonus,  828 

TRUSTEE  - 

May  insure,  6 

Insurance  by,  presumed  to  be  qua  tnistee.OO 

Policy  must  contain  name  of  C.  Q.  T.  and  of,  66,  827 

Enabling  settlor  to  dispose  of  jiolicy  liable,  887 

May  Hellpolicy,  settlor  not  pacing  premiums,  827  ^, 

Whether  premium  must  be  paid  by,  827 

416 


TI 


u, 

U. 


Ui 


INDEX. 

[The  paging  refers  i<>  iho  [  *  ]  pages.] 
TRVSTEE— {Continued}. 

Lien  on  policy  for  advances  bv,  327 

Appointment  under  Married  Women's  Property  Act  of,  230 

Insurers  paying  to,  859 

Secretary  holding  shares  for  company  as  377 

Of  shareholder  in  liquidation,  disclaimer  by,  378 

For  assignee  of  policy,  whether  company  is,  396 

Bound  by  novation  of  settlor,  412,  413 

UBERRIMA  FIDES— 

Whether  insurance  contracts  require,  8,  159 

ULTRA  VIRES— 

How  re-insurrnce  affected  where  insurance  is,  257 

Directors'  acts  where,  368,  870 

Company's  business  must  not  be,  370,  373,  375 

Policies  do  not  bind  where,  870 

Third  persona  and  company  contracting,  370,  378 

Manager  granting  policies,  371,  872 

Whether  nlegal  acts  are,  372 

Whether  informal  acts  are,  872 

Dealings  with  funds  restrained  when,  374,  376 

Claim  on  policy  which  is,  393 

Batiticatiou  of  amalgamation  which  is,  406 

USER— 

Disclosure  of,  108-110 

Whether  to  be  as  descriced,  108-110 

Of  house,  108 

Of  steam-engine,  109  ' 

Increase  of  risk  by,  109,  110, 169,  171 

Change  of,  109,  110 

Of  paper-mill,  110 

Of  kiln,  110 

For  experiment,  171 

Of  oven,  172 

By  non-occupation,  1 72 

VALUATION- 

Of  loss,  195,  197,  198,  200 

VALUED  POLICY— 

May  be  on  land  risk,  3,  27 
Where  value  conclusive,  8,  4 
Proof  of  loss  necessary,  4 
Interest  necessary  for,  221 
Whether  contract  of  indemnity,  226 
Subrogation  iu  case  of,  238 

VENDOR— 

Insurable  interest  of,  unpaid,  64 

Interest  of,  paid,  who  has  not  conveyed,  64,  65 

When  interest  of,  ceases,  65,  181 

Whether  lire  loss  falls  on,  299,  801 

Whether  right  of,  to  stop  in  trandtn  gives  title  to  insurance,  867 

Of  shares,  a  contributory  if  on  register,  377 

27  PORTER  ON  INSURANCE.  417 


521 


I 


522 


INDEX. 


[The  paging  refers  to  tlio  [  *  1  pages.] 
VEKBA  FORTIUS  ACCIPIUNTUR  CONTRA  PROFERENTUM,-30 

WAGER- 

Difference  oetween  insurance  and,  7,  45 

Policy  illegal  if  a,  44-45 

Premiums  not  recoverable  if  policy  a,  44 

WAGES- 

Of  seamen  not  insurable,  44 

WAIVER— 

Of  delay  in  paying  iireminm,  91 

Of  breach  of  condition,  165,  183 

Of  breach  of  policy,  166 

By  resolution  to  pay,  166 

Of  non-disclosure  of  other  insurance,  178,  177 

Of  forfeiture  by  assignment,  183 

Of  proof  of  10.-8,  193,  195 

When  inferred,  194 

Of  condition  as  to  forfeiting  premiums,  204 

By  affirmance  of  contract,  20 "i 

Of  right  to  arbitration,  216 

Of  forfeiture  by  acceptance  of  rent,  277 

By  agent  of  forfeiture,  432,  433 

WAR— 

Payment  of  premium  to  foreign  agent  after  commencement  of,  434 

WARBHOUSEMAN— 

Insurance  for  full  value  by,  58 

Insuring  own  and  another's  goods  without  authority,  440 

WARRANTY— 

Different  on  marine  and  other  policies,  144 

Part  of  the  contract,  144,  146,  147 

Materiality  of,  144,  147 

Must  be  true,  144,  145,  147 

Must  be  performed,  144,  146 

Express  or  implied,  144,  145 

In,  or  incorporated  in  policy,  144,  147 

That  mill  ''worked  by  dav  only,"  141,  146,  147 

Mere  opinion,  and  not,  147 

Not  necessary  to  state  facts  covered  by,  147 

Insurers  may  require  special,  148 

True  "bo  far  as  known,"  148 

Of  "^ood  health,"  149 

That  msured  not  subject  to  fits,  149 

Whether  premiums  returned  were  breach  of,  150 

Evidence  of,  150 

Effect  of  transfer  of  insurer's  business  on,  151 

Declarations  of  insured,  whether  evidence  to  prove  breach  of,  160 

As  to  temperance,  157 

WHARFINGER— 

Insurance  of  full  value  by,  68,  58 

His  liability  to  owner  of  goods  for  fire,  57 

Goods  held  "  in  trust  or  on  commisaion  "  by,  68 

418 


Wl 


INDEX. 


523 


[The  paging  refers  U>  the  [  *  ]  pages.] 

WINDING  UP— 

EflFect  of  assignment  of  iiolicy  before,  318 
Payment  of  assurance  after  order  for,  399 
How  claims  valued  in,  401 
Resuscitation  of  company  for,  410 


^M 


m 


Phila.  :  Blackstone  Pub.  Co. 


O  1/ 


(420) 


^ 


f 


■^Wpfspi  fli^iWA'  -  -■;  ^  ;-  • -:  ;■ 


r 


i     s 


1  '^ 

■1 


